We recently published a list of the 12 Best E-Commerce Stocks to Buy According to Analysts. In this article, we are going to take a look at where Solo Brands, Inc. (NYSE:DTC) stands against other best e-commerce stocks to buy according to analysts.
The E-Commerce Sector and the Shift to Mobile
According to a report by Forbes, the e-commerce industry is expected to grow its valuation from $6.3 trillion in 2024 to $7.9 trillion by 2027. In 2027, 23% of retail purchases are expected to be made online, up from 20.1% in 2024.
American consumers are showing an increasing inclination toward e-commerce and online shopping. On December 26, Michael Zakkour, 5 New Digital founder, appeared on ‘Squawk Box’ to discuss the rise of mobile e-commerce sales, among other things. He said that roughly 25% of all holiday sales happened online in the 2024 holiday shopping season, which translates to a significant year-over-year increase. Black Friday was up 10% online year-on-year, while Cyber Monday was up 13.1%. These numbers highlight that the online sector has grown its share of the pie. Mastercard’s survey of the holiday shopping season further showed that online shopping grew 6.7% in 2024 from a year ago.
Mobiles are a becoming dominant force in this domain. Zakkour said that around 40% of all sales in e-commerce happened on mobiles. He predicted that this number is bound for a significant increase, with around 70% of all e-commerce sales expected to happen on mobiles next year. Zakkour warned that if brands or retailers do not shift their attention to optimizing their businesses for mobile, they will likely have difficulty getting through to consumers next year.
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Trump’s Tariffs: What Do They Mean for the E-commerce Sector?
US President Donald Trump recently announced significant tariffs on the country’s three biggest trading partners: China, Mexico, and Canada. Mexico and Canada will face 25% duties on exports to the United States, while Chinese goods will face a lower number of 10%. Canada has already responded to Trump’s tariffs with retaliatory tariffs of 25% against $155 billion of US goods, according to CNBC.
According to analysts at Morgan Stanley, Chinese companies are among the entities facing the highest risk from these tariffs and the consequent changes in access to the US market. Widely popular China-linked online shopping platforms such as AliExpress, Shein, and Temu may be hit hard by the effects of these tariffs. This is primarily because President Trump has halted a trade exemption called “de minimis,” which previously allowed the duty-free shipment of packages worth less than $800 into the US.
As per claims by US officials, this exemption provided ground for Chinese e-commerce companies to undercut their competition. They also brought to light safety concerns due to the “minimal documentation and inspection” of these imports. According to US Customs and Border Protection Agency statistics, around 1.3 billion “de minimis” shipments were processed in the United States in 2024 alone.
Without “de minimis,” low-cost and high-volume products from online Chinese retailers will face taxes, which may increase the end price of the items, ultimately decreasing their demand.
Our Methodology
We sifted through stock screeners, online rankings, and ETFs to compile a list of 20 e-commerce stocks. We then selected the top 12 stocks with the highest analyst upside potential as of February 3rd, 2024. We also added the number of hedge fund holders for each company, and sourced hedge fund data from Insider Monkey’s database. The stocks are sorted in ascending order of their analyst upside potential.
Why do we care about what hedge funds do? 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).
A customer trying on the style and comfort of the outdoor lifestyle brand’s swim trunks and casual shorts.
Solo Brands, Inc. (NYSE:DTC)
Analyst Upside: 104.08%
Number of Hedge Fund Holders: 8
Solo Brands, Inc. (NYSE:DTC) sells online outdoor products such as Solo Stove firepits, accessories, stoves, portable kayaks, paddle boards, and more. Its portfolio of brands develops and markets products directly to customers, primarily through e-commerce channels.
Despite continued challenging macroeconomic conditions, the company delivered total revenues of $94.1 million in fiscal Q3 2024, with its overall fiscal Q3 2024 results aligned with its expectations.
Solo Brands, Inc. (NYSE:DTC) is also seeing continued momentum from its retail partners. The company is taking steps to address factors affecting its direct-to-consumer channel, and analysts are bullish on Solo Brands, Inc. (NYSE:DTC) due to its potential. It has a new leadership team in place and is supported by strong brands and healthy gross margins. The company is also rolling out new and innovative products to increase its relevance and popularity, including its partnership with the NFL to introduce Solo Stove and Chubbies NFL-branded products.
Overall, DTC ranks 6th on our list of the best e-commerce stocks to buy according to analysts. While we acknowledge the potential of DTC, 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 DTC 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.
