3 Top E-Commerce Stocks to Buy Right Now
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Arguably no technology trend has positively disrupted the world as much as e-commerce. But not every e-commerce business will survive and thrive over the long term -- and that can create peril for investors who put their money to work in the wrong stocks.
So we asked three top Motley Fool contributors to each find an e-commerce stock they believe you would be wise to consider buying now. Read on to learn why they chose lululemon athletica (NASDAQ: LULU), Alibaba (NYSE: BABA), and Shopify (NYSE: SHOP).
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It's no stretch to consider this a top e-commerce play
Steve Symington (lululemon athletica): Lululemon might not be the first name you think of as you consider leaders in the e-commerce space. But the yoga apparel specialist is perfectly positioned to benefit from the rise of online shopping.
In fact, Lululemon shares soared late last week, after the company's latest quarterly growth smashed expectations. Revenue climbed 26% to $1.17 billion, while earnings rose more than 80% to $1.85 per share. In part, management credited the fact that Lululemon's e-commerce sales climbed to 26% of total revenue last year, exceeding a goal the company had previously only targeted reaching by 2020.
Lululemon's business in China was "particularly robust," according to COO Stuart Haselden, with e-commerce sales skyrocketing 140% in the fourth quarter. Over the longer term, Lululemon believes online sales will represent around half of total revenue in the Middle Kingdom.
And Lululemon isn't stopping there. During the subsequent conference call with analysts, Haselden noted that the company has yet to implement investments on "a lot of opportunities" to improve conversion through not only the website, but also on social media and digital marketing channels. As these new investments begin to yield fruit, it should only serve to help Lululemon sustain and accelerate its incredible momentum.
A play on the Chinese economy
Anders Bylund (Alibaba): Like many overseas e-commerce retailers, Chinese e-commerce giant Alibaba is primed for a huge comeback. I think Latin American industry peer MercadoLibre (NASDAQ: MELI) set a solid precedent here, rising 77% in the first quarter of 2019. That company delivered a fantastic earnings report in February, sending share prices skyward in a hurry. Analysts and investors were caught flat-footed by MercadoLibre's 62% currency-adjusted revenue growth and the positive economic trends that drove these surging results.
Latin America is far from the only market experiencing an upswing at the moment. In particular, March reports hot off the presses showed that China posted its strongest manufacturing activity since July. The trade war between Beijing and Washington is still going on, but the Middle Kingdom's long-term economic improvements can only be held back for so long.