We recently compiled a list of the 7 Best E-commerce Stocks to Buy According to Hedge Funds. In this article, we are going to take a look at where Amazon.com Inc (NASDAQ:AMZN) stands against the other e-commerce stocks to buy according to hedge funds.
The Retail Debreif: Growing Consumer Confidence in the US
E-commerce is growing faster than expected and as new avenues of selling online open up, companies are bound to keep up with trends and innovative strategies. According to a report by Forbes, the e-commerce industry is expected to grow to a valuation of $7.9 trillion by 2027 from $6.3 trillion in 2024. In 2027, 23% of retail purchases are expected to be made online, up from 20.1% in 2024.
In the United States, low-income households, with a yearly income of $50,000 or less, happened to spend the most on online spending compared to other groups. On October 17, Reuters reported that retail sales in September increased, as gas prices fell, allowing consumers to spend elsewhere. Overall, the average consumer in the United States spent mostly on clothing, health and personal care stores, and miscellaneous items. Amid rising consumer confidence and spending, the Atlanta Fed raised its GDP estimates for Q3 to 3.4%, up from a previous guidance of 3.2%. Overall, retail sales grew by 0.4% last month.
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Chinese E-commerce Platforms: A Threat or Opportunity?
Chinese e-commerce stocks have been on the rise, despite uncertain macro-economic conditions in the country. As the Chinese government attempts to stimulate the economy, these companies may perform better than expected, meaning other global e-commerce stocks will have to ramp up their investments in sustainable growth strategies. On October 21, Reuters reported that the world’s largest luxury brands in France and Italy reported a decline in quarterly sales as the growing second-hand and grey market for luxury goods in China continues to expand, and demand for luxury brands falls. The second-hand luxury goods market is estimated to be valued at $57 billion, fueled by platforms such as DeWu, where used luxury products are sold at discounted prices. Reuters estimates that DeWu reported a 19% increase across its 48 brands during Q2 2024. Since China makes up 25% of the revenues in the retail sector, consumers shifting to local platforms may cause a hit to global commerce and retail companies.
On October 9, Reuters reported that amid fierce market competition online shopping has been increasing in Europe and other parts of the world. The online shopping market in Europe is expected to reach EUR 958 billion in 2024, up from EUR 887 billion in 2023, representing an increase of 8%, or 5% in inflation-adjusted terms. However, e-commerce experts in Europe share concerns over the growing popularity of cheap e-commerce platforms, especially Temu, increasing competition for local brands. On the flip side, Temu states that it believes in supporting local brands and has invited local merchants in the United Kingdom, Germany, France, Italy, and Spain to join the platform.
The e-commerce industry is rapidly changing and growing, thanks to technology, macroeconomic conditions, and geopolitics. Despite the turmoil, some stocks continue to outperform others. That said, let’s take a look at the 7 best e-commerce stocks to buy according to hedge funds.
Our Methodology
To compile the list of the 7 best e-commerce stocks to buy according to hedge funds, we looked at holdings of e-commerce ETFs and screened for Internet Retail companies on the Finviz stock screener. We sorted our screen by market cap and looked at the 20 largest e-commerce companies. We picked stocks that were the most widely held by institutional investors, as of Q2 2024. The list is in ascending order of the number of hedge fund holders for each stock.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Pixabay/ Public Domain
Amazon.com Inc (NASDAQ:AMZN)
Number of Hedge Fund Holders: 308
Amazon.com, Inc. (NASDAQ:AMZN) ranks first on our list of the best e-commerce stocks to buy according to hedge funds. Amazon, functional in more than 20 countries, entered the e-commerce space in 1994 and now ships to more than 100 countries and regions. The company also specializes in cloud services, artificial intelligence, and digital streaming.
Amazon.com, its e-commerce platform is highly optimized allowing people to make purchases in less than 3 minutes and choose from more than 3 million available items such as electronics, clothing, home appliances, and furniture. During the first half of the year, Amazon.com Inc (NASDAQ:AMZN) delivered products to consumers at the fastest speeds possible. In addition to that, the company also increased product variety by bringing in more brands to their shelves.
In the second quarter of 2024, sales from online stores increased by 6% to reach $55.39 billion. Its expanding customer base and revenue growth can be attributed to its easy-to-use and optimized platform supported by rapid deliveries. So far this year, Amazon.com Inc (NASDAQ:AMZN) managed to deliver 5 billion items on the same day or the next, enhancing the overall experience for customers.
The company is working around the clock to ensure shoppers leave the Amazon online marketplace satisfied. Under some recent developments, the company introduced free restaurant deliveries for all prime members and an additional grocery subscription, allowing customers to save money on grocery items. As Amazon.com Inc (NASDAQ:AMZN) works to improve the customer shopping experience, the umbrella goal for the company is to reduce costs via efficiency gains. Overall, Amazon’s growth strategy coupled with its cost reduction initiatives, promises an increase in its global market share.
Overall AMZN ranks 1st among the 7 best e-commerce stocks to buy according to hedge funds. While we acknowledge the potential of AMZN as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than AMZN but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.