In this article, we will take a look at the 5 best eCommerce stocks to invest in. To see more such companies, go directly to 15 Best eCommerce Stocks to Invest In.
5. Shopify Inc. (NYSE:SHOP)
Number of Hedge Fund Holders: 74
Canadian ecommerce giant Shopify Inc. (NYSE:SHOP) ranks 5th in our list of the best ecommerce stocks to buy now. Shopify Inc. (NYSE:SHOP) was moving recently after the company signed a deal with Amazon after which Shopify store owners will be able to give an option to Buy with Amazon Prime in their stores.
A total of 74 hedge funds out of the 910 funds in Insider Monkey’s database had stakes in Shopify Inc. (NYSE:SHOP). The most significant stakeholder of Shopify Inc. (NYSE:SHOP) was Catherine D. Wood’s ARK Investment Management which had a $573 million stake in the company.
RiverPark Large Growth Fund made the following comment about Shopify Inc. (NYSE:SHOP) in its Q2 2023 investor letter:
“Shopify Inc. (NYSE:SHOP): Shopify shares were a top contributor in the quarter following strong 1Q results and the announced divestiture of its logistics business. Gross Merchandise Volume (GMV) grew 15% year over year as e-commerce sales broadly rebounded and Shopify continued to take market share. Revenue grew 25% driven by increased merchant adoption of multiple products, especially Shop Pay. The company generated $86 million of free cash flow, up from a $46 million loss last year, and announced expectations to be free cash flow positive for each quarter for the rest of the year. The company had previously announced several cost savings plans, which are driving margin and free cash flow improvement, and now plans to divest its capital-intensive logistics arm. Faster growing revenue, lower operating expenses, and a less capital-intensive future were all cheered on by the market.
Last year, 10% of US retail e-commerce sales flowed through SHOP, second only to Amazon, and the company is still enjoying significant tailwinds as retail merchants of all sizes adopt SHOP’s software tools to display, manage and sell their products across a dozen different sales channels. We believe that the overall growth of e-commerce, combined with the development of new products and services, such as its digital wallet Shop Pay, should continue to drive revenue growth of more than 20% per year over the next several years, accompanied by re-acceleration of operating margin growth and FCF generation.”
4. MercadoLibre, Inc. (NASDAQ:MELI)
Number of Hedge Fund Holders: 77
Argentina-based ecommerce and online marketplace company MercadoLibre, Inc. (NASDAQ:MELI) ranks 4th in our list of the best ecommerce stocks to buy now according to hedge funds. In August, Wedbush started covering MercadoLibre, Inc. (NASDAQ:MELI) with an Outperform rating and a $1,500 price target.
A total of 77 hedge funds in Insider Monkey’s database of 910 hedge funds had stakes in MercadoLibre, Inc. (NASDAQ:MELI) as of the end of the second quarter of 2023.
Artisan Developing World Fund made the following comment about MercadoLibre, Inc. (NASDAQ:MELI) in its Q3 2023 investor letter:
“Top contributors to performance for the quarter included Latin American marketplace MercadoLibre, Inc. (NASDAQ:MELI). MercadoLibre rose as a result of continued share gains across key markets and supportive Brazilian regulations aimed at creating a level playing field in cross-border e-commerce.”
3. Booking Holdings Inc. (NASDAQ:BKNG)
Number of Hedge Fund Holders: 78
Booking Holdings Inc. (NASDAQ:BKNG) is one of the biggest online travel players in the world. HSBC recently gave a Buy rating to Booking Holdings Inc. (NASDAQ:BKNG) and set a price target of $3,650.
Of the 910 hedge funds in Insider Monkey’s database, 78 hedge funds were long Booking Holdings Inc. (NASDAQ:BKNG). The most significant stakeholder of Booking Holdings Inc. (NASDAQ:BKNG) was Guardian Capital’s GuardCap Asset Management which had an $850 million stake in the company.
Wedgewood Partners made the following comment about Booking Holdings Inc. (NASDAQ:BKNG) in its Q3 2023 investor letter:
“Booking Holdings Inc. (NASDAQ:BKNG) also contributed to portfolio performance during the quarter. The Company reported continued healthy travel demand during the quarter that ended in June, with accelerating trends into July. In addition, Booking’s alt-accommodations sub-segment (about 35% of Booking’s total room nights) reported +11% room night growth, in-line with the Company’s largest pure-play alt-accommodations competitor, Airbnb. We estimate Booking’s total alt-accommodation room nights per quarter are approaching parity with Airbnb, yet Booking has a vastly superior GAAP operating margin structure – even as Booking aggressively outspends Airbnb on merchandising and payment functions, as well as paid search marketing efforts. There is still plenty of room for Booking to take wallet share in consumer travel budgets, which are still pent-up from the pandemic, particularly outside the United States.”
2. Alibaba Group Holding Limited (NYSE:BABA)
Number of Hedge Fund Holders: 112
Alibaba Group Holding Limited (NYSE:BABA) ranks 2nd in our list of the best ecommerce stocks to buy now. A total of 112 hedge funds were long Alibaba Group Holding Limited (NYSE:BABA), as per Insider Monkey’s database of 910 elite money managers. The biggest stake in Alibaba Group Holding Limited (NYSE:BABA) was owned by David Tepper’s Appaloosa Management LP which had a $373 million stake in the company.
Alibaba Group Holding Limited (NYSE:BABA) is pouring money into Chinese AI startups. Bloomberg reported that Alibaba Group Holding Limited (NYSE:BABA), along with Tencent (OTCPK:TCEHY) (OTCPK:TCTZF), was among the entities that invested $342 million in Chinese artificial intelligence startup Beijing Zhipu Huazhang Technology this year. Alibaba Group Holding Limited (NYSE:BABA) also joined Tencent (OTCPK:TCEHY) (OTCPK:TCTZF) for a $300 million funding round for AI company Baichuan Intelligent Technology.
L1 Long Short Fund made the following comment about Alibaba Group Holding Limited (NYSE:BABA) in its second quarter 2023 investor letter:
“Alibaba Group Holding Limited (NYSE:BABA) (Long -18%) shares weakened in recent months as Chinese reopening strength faded and macro-economic datapoints began sequentially declining. Nevertheless, we believe the Chinese government will use consumption as a key lever to reinvigorate the economy post-COVID lockdowns. Alibaba remains a high-quality business with leading positions in both eCommerce and Public Cloud, and management is taking proactive steps to unlock shareholder value. It has announced plans to split into six major business groups – Cloud Intelligence, Taobao Tmall, Local Services, Global Digital, Cainiao Smart Logistics and Digital Media, and Entertainment Group. Each group will be managed independently, with a separate CEO and board, have the flexibility to raise external capital and potentially pursue separate IPOs. We believe this restructure will be a strong positive catalyst to unlock the sum-of-the-parts valuation upside in the company.”
1. Amazon.com, Inc. (NASDAQ:AMZN)
Number of Hedge Fund Holders: 278
Amazon.com, Inc. (NASDAQ:AMZN) tops the list of the best ecommerce stocks to buy according to hedge funds, which is unsurprising. Amazon.com, Inc. (NASDAQ:AMZN) recently reported Q3 results, beating estimates for EPS and revenue. However, Amazon.com, Inc. (NASDAQ:AMZN)’s Cloud business missed estimates for the quarter. Still, CEO Andy Jassy reaffirmed that he sees huge growth for AWS in the coming days.
A total of 278 hedge funds tracked by Insider Monkey had stakes in Amazon.com, Inc. (NASDAQ:AMZN) as of the end of the June quarter. The biggest stake in Amazon.com, Inc. (NASDAQ:AMZN) is owned by Natixis Global Asset Management’s Harris Associates which had a $2 billion stake in the company.
White Falcon Capital Management made the following comment about Amazon.com, Inc. (NASDAQ:AMZN) in its Q3 2023 investor letter:
“There are comparable narratives involving NU Holdings, Amazon.com, Inc. (NASDAQ:AMZN), and Teck Resources, to name a few holdings from the White Falcon portfolio. Amazon constructed its logistics network and cloud computing infrastructure using yesterday’s currency, but it is poised to capitalize on this network with the inflated dollars of tomorrow. In essence, we believe we hold wonderful businesses with growing revenue streams and potential for operating leverage – all at reasonable valuations.”
You can also take a peek at 11 Undervalued Mid Cap Stocks To Buy According to Analysts and 12 Most Important Holidays in the US.
