7 Best E-commerce Stocks To Buy According to Hedge Funds

3. Alibaba Group Holding Limited (NYSE:BABA)

Number of Hedge Fund Holders: 91

Alibaba Group Holding Limited (NYSE:BABA) is a technology and internet retail company that operates e-commerce sites that serve both consumers and small business owners, making it one of the best e-commerce stocks to buy according to hedge funds. The company also has stakes in cloud computing, logistics, digital media, and entertainment.

AliExpress is a popular retail site for mass consumers who can purchase all sorts of items such as appliances, office equipment, home improvement, and sports equipment, at an affordable price. The platform has over 150 million users and is present in 190 countries. On the supplier front, AliExpress now houses local merchants, allowing the company to meet the local needs of customers and maintain its market share. During the second quarter, the company also formed a partnership with a retailer in Brazil to open and operate a storefront on AliExpress and vice versa.

The company is focused on offering premium customer experiences through quality products at affordable prices. Its Alibaba International Digital Commerce Group segment grew its revenue by 32% year-over-year to reach $4.03 billion in the second quarter of 2024. Growth primarily came from its strategies targeted to achieve faster deliveries and enhanced shopping experiences, allowing users to source products from factories directly.

Alibaba Group’s (NYSE:BABA) platforms are used by more than 800 million people worldwide. It has a 40% share in the Chinese e-commerce market, as per estimates by the DBS Bank in Hong Kong, and is expected to experience growth amid economic turmoil and fierce competition.

Patient Capital Management stated the following regarding Alibaba Group Holding Limited (NYSE:BABA) in its Q3 2024 investor letter:

“Alibaba Group Holding Limited (NYSE:BABA) experienced a massive rebound gaining +47% in the quarter following the announced stimulus program from the Chinese government. As the unexpectedly strong government support was announced, shorts were reversed and any name exposed to China was off to the races. We have long liked Alibaba as the company has continued to trade at a significant discount to its sum-of-the-parts valuation. With most investors writing off Chinese companies entirely, you had an opportunity to invest in a high-quality business at rock bottom prices. Over that time, the company initiated both a dividend (0.9% Yield) and buyback program, repurchasing 9% of shares outstanding over the last twelve months. Despite the strong move in the quarter, the company trades at just 12.4x next-year’s earnings. We see potential for continued multiple expansion as the Chinese economy rebounds and the country becomes investable again.”