The e-commerce industry has been one of the biggest winners during the coronavirus pandemic. With pandemic-driven lockdown and social distancing norms forcing people to stay indoors, shopping from the comfort of one’s own home has gained immense popularity. As more and more consumers get familiar with the online marketplace, these companies are ramping up their logistics and upgrading their platforms. The bullishness for the industry is evident in  Global X E-Commerce ETF’s (EBIZ) 83% gains over the past year.

Nationwide vaccine distribution has started, but with the daily increase in COVID-19 cases the e-commerce industry is likely to stay relevant and competitive in the coming quarters.

International internet retail companies MercadoLibre, Inc. (MELI) and Jumia Technologies AG (JMIA) have been able perform well amid the pandemic. Based on their future growth potential, we believe these stocks still have plenty of upside.

MercadoLibre, Inc. (MELI) 

MELI is an e-commerce company that operates primarily  in Latin America. The company offers integrated ecommerce solutions for individuals and companies through three platforms – Mercado Libre, Mercado Pago, Mercado Shops and others.

MELI received approval from  the Brazilian Central Bank in November to expand its operations in the credit market. This will allow MELI to reduce its overhead expenses while streamlining credit transactions.

In late November, MELI selected Amazon.com, Inc. (AMZN) as its primary cloud provider. This will enable MELI to enhance user experience and accelerate the lunch of new products through Amazon Web Services (AWS). This  move was made  to expand its regional clientele base by providing  more secure and reliable performance.

This month , the company closed its public offerings of $400 million in 2.4% notes due 2026 and $700 million 3.1% notes due 2031. MELI intends to use the proceeds from the offerings to finance new projects, promote triple-impact projects across Latin America, and to increase its investments in priority areas.

MELI’s revenues have increased 85% year-over-year to $1.12 billion in the third quarter ended September 30, 2020. This is attributable net revenues that continued accelerating and hit their highest historical growth rate. Its Income from operations has increased 201.4% from its  year-ago value to $83.07 million, while its EPS rose 109.5% to $0.28 over the same period. The company’s gross merchandise volume increased 62.1% to $5.9 billion.

Analysts expect MELI’s EPS to rise 101.8% year-over-year to $0.02 for the about-to-be reported quarter ending December 31, 2020. The company has an impressive earnings surprise history; t beat the Street’s EPS estimates in three of trailing four quarters. A consensus revenue estimate of $1.21 billion for the fourth quarter represents  a 79.4% rise year-over-year. MELI has gained 162.9% over the past year.

How does MELI stack up for the POWR Ratings?

A for Trade Grade

B Buy & Hold Grade

B for Peer Grade

A for Industry Rank

B for Overall POWR Rating.

The stock is currently ranked #16 of 69 stocks in the Internet industry.

Jumia Technologies AG (JMIA)

JMIA is a German-based e-commerce platform that operates primarily  in Africa. The company operates as an online marketplace for a wide range of products. It also provides logistics and payment services through Jumia Logistics, and JumiaPay.

in November, JMIA allowed its  logistics service to  be used by third parties. Prior to this, the service was reserved exclusively for ecommerce and food vendors operating on its marketplace. This was a strategic move implemented to further expand its business operations.

In late November, JMIA entered an “at the market offering” sales agreement with Citigroup Global Markets Inc. (CITI) for the sale of approximately  eight million ADS. This agreement should  deliver sufficient proceeds to help the company  finance its r business operations. JMIA registered 6.70 million annual active consumers in the third quarter ended September 30, 2020, a year-over-year increase of 22.8%. JMIA’s gross profit has increased 22.5% year-over-year to €23.25 million over the same period, while its adjusted EBITDA improved 50.1% from the negative year-ago value.

Analysts expect JMIA’s revenues to rise 29.6% year-over-year to $219.60 million for the fiscal 2021 ending December 31. The consensus EPS estimate for the current year represents a 17.7% improvement from a negative year-ago value. The company has an impressive earnings surprise history; it beat the Street EPS estimates in each of the trailing four quarters. The stock has gained 682.7% over the past year.

It is no surprise then that JMIA is rated Strong Buy with an A for Trade Grade, Peer Grade, and Industry Rank, and a B for Buy & Hold Grade. It is currently ranked #8 of 39 stocks in the same industry.

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MELI shares rose $0.16 (+0.01%) in after-hours trading Thursday. Year-to-date, MELI has gained 10.12%, versus a 1.00% rise in the benchmark S&P 500 index during the same period.

About the Author: Rishab Dugar

Rishab is a financial journalist and investment analyst. His investment approach is to focus on quality stocks, trading at low prices, with business models that he readily understands. More...

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