In this article, we will be looking at the 5 best ecommerce stocks to invest in. To see our detailed analysis of ecommerce stocks, you can go directly to see the 12 Best Ecommerce Stocks to Invest In.
5. The Home Depot, Inc. (NYSE: HD)
Number of Hedge Fund Holders: 68
The Home Depot, Inc. (NYSE: HD) is a home improvement retailer that operates the Home Depot stores selling a range of building materials, home improvement products, and other related items. The company has one of the largest e-commerce businesses in the US and ranks 5th on our list of the best ecommerce stocks to invest in.
This month, The Home Depot, Inc. (NYSE: HD) added a new online rental facility in about 1,300 rental locations, with the new technology allowing customers to reserve rental equipment 30 days in advance online, to be picked up when needed from the store. In a channel check by Wells Fargo this June, The Home Depot, Inc. (NYSE: HD) received positive responses, and an Overweight rating was maintained. J.P. Morgan has also mentioned that The Home Depot, Inc. (NYSE: HD) is among its top consumer stock picks. In the fiscal first quarter of 2022, The Home Depot, Inc. (NYSE: HD) had an EPS of $3.86, beating estimates by $0.81. The company’s revenue was $37.5 billion, up 32.7% year over year and beating estimates by $2.87 billion. The company has a gross profit margin of 33.94% and the stock has gained 19.81% in the past 6 months and 20.58% year to date.
By the end of the first quarter of 2021, 68 hedge funds held stakes in The Home Depot, Inc. (NYSE: HD) worth roughly $4.35 billion. This is compared to 79 hedge fund holders in the previous quarter with a total stake value of approximately $4.92 billion.
Ensemble Capital, an investment management firm, mentioned The Home Depot, Inc. (NYSE: HD) in its first-quarter 2021 investor letter. Here’s what they said:
“Notable contributors to the Fund’s returns this quarter (included) Home Depot. Home Depot (8.9% weight in the Fund) continued to benefit from a red-hot housing and home improvement market, delivering record financial performance in 2020. As a high return on invested capital business, any step-up in growth results in considerable shareholder value creation. While 2021 comparable sales may not yield impressive headline results, we believe there are several secular tailwinds supporting continued housing investment, including millennials entering prime household formation/peak earnings years, relatively low interest rates, and government policies.
Home Depot (8.9% weight in the Fund): The big orange sign of Home Depot is a familiar sight for homeowners across the country. Despite the rise of Amazon, Home Depot has generated outstanding results for shareholders during the rise of eCommerce, even as Home Depot’s end market in housing suffered the worst collapse in a century. Over the last fifteen years, a period which began at the peak of the housing bubble, Home Depot’s stock has generated annual returns of 17% a year, outperforming the S&P 500 by approximately 7% a year.” (Click here to see the full text)
4. JD.com, Inc. (NASDAQ: JD)
Number of Hedge Fund Holders: 75
JD.com, Inc. (NASDAQ: JD) is an e-commerce company and retail infrastructure provider in China. The company has two segments: JD Retail, and New Businesses. It ranks 4th on our list of the best ecommerce stocks to invest in.
This May, JD Logistics under JD.com, Inc. (NASDAQ: JD) rose 3% and raised $3.1 billion in the second-largest IPO in Hong Kong so far this year. In the first quarter of 2021, JD.com, Inc. (NASDAQ: JD) had an EPS of $0.38, beating estimates by $0.03. Its revenue was $31.57 billion, up 53.34% year over year and beating estimates by $1.6 billion. The company has a gross profit margin of 7.92% and JD.com, Inc. (NASDAQ: JD) has gained 32.52% in the past year.
By the end of the first quarter of 2021, 75 hedge funds held stakes in JD.com, Inc. (NASDAQ: JD) worth roughly $11.3 billion. This is compared to 89 hedge fund holders in the previous quarter with a total stake value of approximately $14.39 billion.
Arisaig Partners, an investment management firm, mentioned JD.com, Inc. (NASDAQ: JD) in their first-quarter 2021 investor letter. Here’s what they said:
“Our largest holding as a firm, JD.com, we expect to grow earnings at an annualised rate of 30% over the next five years, implying it will trade on an EV / EBITDA of 7.5x at the end of this period. Is this a growth stock or a value stock? Does anyone care? Do these labels really matter?
For the Asia Fund, with a higher pre-existing allocation to our core FMCG holdings coming into the year, we took advantage of capital market volatility to further concentrate on our highest conviction names. JD.com has been the main destination for our limited reallocations as evidence continues to emerge supporting our thesis that the company has a strong right-to-win in the large and highly fragmented USD1.8th Chinese grocery market. We have also been encouraged by the fact that after years of persistence, the company is beginning to engage with us on ESG issues (we have specifically discussed data protection, climate change and the circular economy). ESG is now being considered at the board level, and specific sustainability reporting should follow in the coming months. Having long displayed a healthy obsession with customer service, we interpret these latest conversations as a sign that JD is beginning to develop a more sophisticated understanding of its impact on all stakeholders.”
3. Shopify Inc. (NYSE: SHOP)
Number of Hedge Fund Holders: 91
Shopify Inc. (NYSE: SHOP) is a commerce company operating in Canada, the US, the UK, Australia, Latin America, and internationally. The company’s platform allows merchants to run their businesses on a range of sales channels including web and mobile storefronts and social media channels. It ranks 3rd on our list of the best ecommerce stocks to invest in.
On June 30th, despite investors’ disappointment at Shopify Inc.’s (NYSE: SHOP) Unite 2021 event, analysts from Loop Capital, RBC, and Jefferies stepped in to defend the stock. Loop Capital reiterated its Buy rating on the stock, with an increased price target of $1,600, and analyst Anthony Chukumba saying he felt more confident in Shopify Inc.’s (NYSE: SHOP) future growth. RBC also increased its price target to $1,700, while Jefferies has a Buy rating on the stock as well. Shopify Inc. (NYSE: SHOP) has announced a new Online Store and Shopify Theme Store launch as well and has furthered its partnership with Facebook, Inc. (NASDAQ: FB) and Alphabet Inc. (NASDAQ: GOOG) by making its one-click checkout available to sellers on Facebook and Google.
In the first quarter of 2021, Shopify Inc. (NYSE: SHOP) had an EPS of $2.01, beating estimates by $1.26. The company’s revenue was $988.65 million, up 110.35% year over year and beating estimates by $127.56 million. It has a gross profit margin of 53.46% and the stock has gained 31.01% in the past 6 months and 35.76% year to date.
By the end of the first quarter of 2021, 91 hedge funds held stakes in Shopify Inc. (NYSE: SHOP) worth roughly $9.98 billion. This is compared to 90 hedge fund holders in the previous quarter with a total stake value of approximately $8.72 billion.
2. Alibaba Group Holding Limited (NYSE: BABA)
Number of Hedge Fund Holders: 135
Alibaba Group Holding Limited (NYSE: BABA) provides online and mobile commerce businesses in China and internationally. The company operates various online wholesale markets including AliExpress, Lazada, and Tmall Global, among others. It ranks 2nd on our list of the best ecommerce stocks to invest in.
On June 21st, ZIM Integrated Shipping Services Ltd. (NYSE: ZIM) and Alibaba Group Holding Limited (NYSE: BABA) added two years to their partnership enabling the latter’s e-commerce merchants to book sea freight and other services from the former. In the fiscal fourth quarter of 2021, Alibaba Group Holding Limited (NYSE: BABA) had an EPS of $1.60, missing estimates by -$0.17. Its revenue was $29.05 billion, up 81.18% year over year and beating estimates by $1.13 billion. Alibaba Group Holding Limited (NYSE: BABA) has a gross profit margin of 41.28% and has gained 0.7% year to date.
By the end of the first quarter of 2021, 135 hedge funds held stakes in Alibaba Group Holding Limited (NYSE: BABA) worth roughly $15.49 billion. This is compared to 156 hedge fund holders in the previous quarter with a total stake value of approximately $17.89 billion.
Polen Capital Management recently released its Q1 2021 Investor Letter, where it mentioned Alibaba Group Holding Limited (NYSE: BABA). Here’s what they said:
“Alibaba also detracted from performance as the company continues to remain under regulatory scrutiny from both the Chinese State Administration for Market Regulation on antitrust concerns and the U.S. Securities and Exchange Commission on ADR listing requirements. Despite the regulatory overhang, we believe that Alibaba’s competitive positioning and growth outlook remains intact, even if the company must pay fines or modify some business practices. We viewed the current valuation at <20x next twelve month’s earnings as a compelling opportunity to add to our position. Alibaba is the second largest position in the Portfolio.”
1. Amazon.com, Inc. (NASDAQ: AMZN)
Number of Hedge Fund Holders: 243
Amazon.com, Inc. (NASDAQ: AMZN) is a tech giant operating in the retail sale of consumer products and subscriptions in the US and internationally. The company has three segments, North America, International, and Amazon Web Services. It ranks 1st on our list of the best ecommerce stocks to invest in.
On June 29th, Amazon.com, Inc. (NASDAQ: AMZN) acquired SmartLess rights for about $60-80 million, with new episodes due to appear on Amazon Music and Wondery this August. This month, Switzerland’s leading telecom company Swisscom also picked Amazon.com, Inc. (NASDAQ: AMZN) as its partner in public cloud provision. In the first quarter of 2021, Amazon.com, Inc. (NASDAQ: AMZN) had an EPS of $15.79, beating estimates by $6.15. The company’s revenue of $108.52 billion was up 43.82% year over year and beat estimates by $3.89 billion. The stock has gained 5.87% in the past 6 months and 8.21% year to date, while Amazon.com, Inc. (NASDAQ: AMZN) also has a gross profit margin of 40.48%.
By the end of the first quarter of 2021, 243 hedge funds held stakes in Amazon.com, Inc. (NASDAQ: AMZN) worth roughly $50.4 billion. This is compared to 273 hedge fund holders in the previous quarter with a total stake value of approximately $51.5 billion.
Our calculations show that Amazon.com, Inc. (NASDAQ: AMZN) ranks 3rd in our list of the 30 Most Popular Stocks Among Hedge Funds.
You can also take a peek at the 15 Best Retail Stocks for 2021 and Top 15 Online Shopping Websites in 2020.
