E-commerce companies have had a stellar year so far. The surge in e-commerce driven by the pandemic has caused many retailers to take their businesses online to make it easier for consumers to shop from home.
Irrespective of the ability of medical science to control the virus through effective vaccines or treatments, the online shopping trend is expected to continue for the years to come as consumers get more accustomed to shopping online. As customers begin to feel that it is more convenient to shop online, and online retailers ramp up their logistics and create more efficient delivery systems, e-commerce platforms should continue to see a steady rise in popularity over the coming years. The global e-commerce industry is expected to grow at a CAGR of 14.7% between 2020 to 2027.
Companies like Amazon.com (AMZN), Walmart, Inc. (WMT), Target Corporation (TGT), and Chewy, Inc. (CHWY) have had a great year so far. These companies are still working on improving their offerings and making it increasingly convenient for people to shop online. So, it could be smart to consider their stocks before they soar further.
AMZN is the world’s largest e-commerce portal. The company also provides cloud computing services through Amazon Web Services and operates a streaming platform, Prime Video, among other ventures. AMZN’s stock has gained 72.4% so far this year.
AMZN has recently launched Amazon Pharmacy which will allow users to buy their medications directly with their smartphones and web browsers. The company is also working on drones that will help with last-mile deliveries and are expected to make deliveries more efficient.
For the quarter that ended September, 2020, the company saw an increase in net sales of 37%, compared to the same period last year. Operating cash flow rose 56% year-over-year.
AMZN is expected to witness revenue growth of 26.2% for the quarter that ended March 2021 and 18.3% in 2021. The company’s EPS is estimated to grow 30.1% in 2021 and at a rate of 36.4% per annum over the next five years.
How does AMZN stack up for the POWR Ratings?
B for Buy & Hold Grade
A for Industry Rank
B for Overall POWR Rating
The stock is also ranked #14 out of 59 stocks in the Internet industry.
Walmart, Inc. (WMT)
WMT operates a wide network of supermarkets, discount stores, hypermarkets, and other types of retail destinations across the United States. The company runs through Walmart US, Walmart International, and Sam’s Club. WMT’s stock has gained 27.8% so far this year.
WMT is working on making its e-commerce operations more efficient by using physical stores to fulfil orders. This move will help reduce the burden on WMT’s online fulfilment centers and also create greater customer satisfaction. The company has also doubled the strength of its delivery personnel.
For the third quarter, the company’s total revenue grew 5.2% compared to the same period last year. The company’s revenue from e-commerce rose 79% during the same period.
WMT is expected to witness revenue growth of 4.3% for the current quarter and 5.9% in 2021. The company’s EPS is estimated to grow 13.2% in 2021 and at a rate of 6.8% per annum over the next five years.
It’s no surprise that WMT is rated a “Strong Buy” in our POWR Ratings system, with a grade of “A” in Trade Grade, Buy & Hold Grade, and Industry Rank. In the 18-stock Grocery/Big Box Retailers industry, it is ranked #1.
Target Corporation (TGT)
TGT is a general merchandise retailer that offers consumables, home improvement products, apparel, seasonal goods, and more. TGT has operations in the United States and Canada. TGT’s stock has gained 40.3% so far this year.
TGT is currently holding its Black Friday Now deals, which will allow customers to get holiday season discounts. These deals are also available on the company’s e-commerce portal and customers can avail for same-day delivery as well.
For the third quarter, the company reported an increase in comparable sales of 20.7% year-over-year. The company also saw a 155% rise in e-commerce during the same period.
TGT is expected to witness revenue growth of 13.9% for the current quarter and 17.6% in 2021. The company’s EPS is estimated to grow 41.6% in 2021 and at a rate of 13% per annum over the next five years.
It’s no surprise that TGT is rated a “Strong Buy” in our POWR Ratings system, with a grade of “A” in Trade Grade, Buy & Hold Grade, Peer Grade, and Industry Rank. In the 18-stock Grocery/Big Box Retailers industry, it is ranked #3.
Chewy, Inc. (CHWY)
CHWY operates a specialty e-commerce platform that offers pet-related products and pet food. In 2017, the company was acquired by PetSmart in the largest acquisition of an e-commerce outfit until then. CHWY’s stock has gained 139.1% so far this year.
CHWY is working on expanding its operations to meet the needs of modern consumers. The company now offers compounded medications for pets through its platform. The company has also launched telehealth services for pets which will soon be available nationwide.
For the second quarter that ended August 2020, CHWY saw an increase in net sales of 47% compared to the same period last year. Adjusted EBITDA improved 153% during the same period.
CHWY is expected to witness revenue growth of 32.3% for the quarter ending January 2021 and 41.1% in 2021. The company’s EPS is estimated to grow 31.7% in 2021 and at a rate of 132.1% per annum over the next five years.
CHWY’s strong fundamentals are reflected in its POWR Ratings. It has a “Strong Buy” rating with an “A” in Trade Grade and Peer Grade. It is ranked #5 out of 34 stocks in the Consumer Goods industry.
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AMZN shares were trading at $3,207.00 per share on Friday morning, up $21.93 (+0.69%). Year-to-date, AMZN has gained 73.55%, versus a 14.66% rise in the benchmark S&P 500 index during the same period.
About the Author: Aaryaman Aashind
Aaryaman is an accomplished journalist that’s passionate about providing in-depth insights about investing and personal finance. Recently he has been focused on the stock market and he specializes in evaluating high-growth stocks. More...
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