A major portion of shopping will continue to be on e-commerce platforms during the upcoming holiday season. Coupled with this, the Black Friday and Cyber Monday sales would also boost the e-commerce momentum. A recent study by Adobe Analytics revealed that in the last couple of weeks, consumers in the United States spent $21.7 billion online, indicating a 21% year-over-year increase.
Adobe further expects the Thanksgiving and Cyber Monday sales to grow 35% to 40% year-over-year this year. The e-commerce companies are gearing up for big times not just in 2020, but for the next few years.
We have seen that few of the large e-commerce players have benefited from this situation and rallied in the recent pandemic. However, a few mid-cap players like MercadoLibre, Inc. (MELI), Chewy, Inc. (CHWY), and Revolve Group, Inc. (RVLV) have massive growth prospects but are still under the radar. Hence, this is the right time to consider these relatively less-focused stocks before they gain significant attention.
MercadoLibre, Inc. (MELI)
MELI is a South-American company that operates online marketplaces dealing in e-commerce and online auctions. Not just the e-commerce space, MELI also has a strong presence in digital payments. Its online payment service MercadoPago is one of the most preferred choices of payments not just on its platform, but also on other platforms.
Last week, The Brazilian central bank allowed MercadoLibre to operate as a financial institution in the country. According to Bloomberg, the company also received close to $74.2 million for increasing Mercado Pago’s working-capital for businesses and entrepreneurs in Brazil. The e-commerce and digital payment boom should do more wonders for MELI in store. Venzee, a tech-based logistics enabler, announced an integration with MELI to allow brands to connect 320 million customers through a single connection.
During the third quarter that ended September 2020, MELI’s revenue soared 148.5% year-over-year to $1.1 million. Its total payment volume for the quarter rose 161.2%, while its gross merchandise volume climbed 117.1%. MELI’s unique active users jumped 92.2% to reach 76.1 million. The company also posted an EPS of $0.94, compared to the loss per share of $2.60 posted in the same period last year.
Analysts expect revenue for the quarter ending December 2020 to be $1.2 billion, indicating a 72.9% increase year-over-year. Meanwhile, EPS for the next quarter is likely to climb 104.5% to $0.05.
On a year-to-date basis, MELI surged 130.5% to end yesterday’s trading session at $1318.09. During the past six months, the stock has soared 65.9%.
How does MELI stack up for the POWR Ratings?
A for Trade Grade
B for Buy & Hold Grade
B for Peer Grade
A for Industry Rank
B for Overall POWR Rating
The stock is also ranked #8 out of 58 stocks in the Internet industry.
Chewy, Inc. (CHWY)
CHWY is an e-commerce platform based in the United States that deals primarily in pet care products. These include food, supplies, medications, toys, accessories, and other health products for dogs, cats, birds, fish, horses, and reptiles. CHWY offers over 60,000 products from over 2,000 brands.
Addressing the current pandemic situation, CHWY announced a new telehealth service called “Connect with a Vet” in October. This service allows pet parents and veterinarians to use CHWY’s proprietary tele-triage platform to ensure continuous healthcare for the pets. While the vets wouldn’t be able to provide complete treatment or prescribe medication without a physical checkup of the pet, it would allow pet parents to discuss common concerns and seek guidance on the overall wellness of the pets.
Earlier this month, CHWY also expanded its Pharmacy (Rx) business to now offer compounded medications that are tailored to specific pet needs.
CHWY’s net sales climbed 47% year-over-year to $1.7 billion during the second quarter that ended August 2020, led by sales in hardgoods and consumables. The company’s adjusted EBITDA surged 153% year-over-year to $15.5 million. CHWY’s number of active customers during the quarter climbed 37.9% year-over-year to 4.6 million.
The street estimates revenue for the next quarter to climb 40.2% year-over-year to $1.7 billion, while EPS is expected to grow at 132.1% per annum for the next five years.
CHWY rallied 129% year-to-date to close yesterday’s trading session at $66.40. Over the past six months, the stock has soared 61.4%.
It’s no surprise that CHWY is rated a “Buy” in our POWR Ratings system, with a grade of “A” in Trade Grade and Industry Rank, and a “B” in Buy & Hold Grade and Peer Grade. In the 34-stock Consumer Goods industry, it’s ranked #5.
Revolve Group, Inc. (RVLV)
RVLV is an online fashion retailer that operates in the United States and other countries through two segments-Revolve and Forward. It is a unique platform that focuses on fashion for millennial women. RVLV sells women’s apparel, accessories, footwear, and beauty styles under various brands. It also connects fashion influencers, consumers, and brands (established and upcoming).
RVLV announced the launch of upgraded service levels in Canada in October to enhance the customer experience in one of its largest markets. The company’s Canadian customers will now access hassle-free returns at no cost, including refunds of all applicable duties and taxes. The company would also provide free 2-day express shipping for Canadian customers as a part of the upgraded service plan.
During the third quarter that ended September 2020, RVLV’s net sales slipped 2% year-over-year to $151 million. The FORWARD segment net sales rose 9% year-over-year to $20.5 million driven by demand in the handbag category. Active customers on the portal climbed 5% to 1.5 million compared to the prior-year period. The company’s EPS for the quarter rose to $0.27, compared to $0.13 posted in the same period last year.
For the quarter ending December 2020, analysts expect revenue to be $136.5 million, down 7.5% year-over-year. The consensus estimate for EPS growth for next year is 9.5%.
RVLV surged 8% year-to-date to end yesterday’s trading session at $19.82. The stock has rallied 46.8% during the past six months.
RVLV strong fundamentals are reflected in its POWR Ratings. It has a “Strong Buy” rating with an “A” in Trade Grade and Industry Rank and a “B” in Peer Grade. In the 34-stock Consumer Goods industry, it is ranked #9.
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MELI shares were trading at $1,356.84 per share on Thursday afternoon, up $38.75 (+2.94%). Year-to-date, MELI has gained 137.23%, versus a 11.99% rise in the benchmark S&P 500 index during the same period.
About the Author: Namrata Sen Chanda
Namrata is an accomplished financial journalist, with nearly a decade of experience. She specializes in interpreting news releases and framing investment strategies, and has worked with some of the leading companies in real estate, banking, insurance, mutual funds, financial research, fintech, and investment education. More...
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