The global retail landscape has been reshaped by the rise of e-commerce, with a few dominant players leading the charge. These giants have revolutionized how consumers shop by leveraging advanced technologies, seamless user experiences, and expansive logistics networks.
Amid these prospects, investors might consider buying leading e-commerce stocks, including Amazon.com, Inc. (AMZN), Alibaba Group Holding Limited (BABA), and Sea Limited (SE), that are poised for substantial growth.
More than 80% of retail executives predict adopting AI-powered automation tools by 2027, indicating the increasing importance of AI in retail. Also, firms are investing heavily in data analytics and AI, enabling them to predict consumer behavior and optimize inventory management. This data can increase sales and boost customer loyalty through thoughtful and individualized interactions.
Additionally, companies are revolutionizing logistics and customer service with faster delivery times and unmatched product selection. Digital innovation and personalized shopping experiences continuously push the boundaries of what online retail can offer. Moreover, the global e-commerce market is projected to reach $83.26 trillion by 2030, exhibiting a CAGR of 18.9%.
With that in mind, let’s examine the fundamentals of the three above-mentioned e-commerce stocks.
Amazon.com, Inc. (AMZN)
AMZN is a global giant in the retail sector, offering consumer products, advertising, and subscription services through online and physical stores across North America and international markets. The company has a market cap of $1.76 trillion and operates through three segments: North America; International; and Amazon Web Services (AWS).
For the fourth quarter of 2024, which ended on December 31, AMZN's total net sales increased 10.5% year-over-year to $187.79 billion, while the operating income stood at $21.20 billion, up 60.5% year-over-year. Its net income amounted to $20.00 billion, representing an increase of 88.3% from the last year’s period. Also, the company’s earnings per share for the quarter increased 86% year-over-year to $1.86.
Analysts expect AMZN’s revenue for the first quarter (ending March 2025) to increase 8.2% year-over-year to $155.02 billion, while its EPS for the same quarter is expected to grow 37.8% from the prior year to $1.35. Moreover, the company has surpassed Street EPS estimates in each of the trailing four quarters.
Moreover, AMZN’s EBIT has grown at CAGRs of 40.2% and 36.4% over the past three and five years, respectively. In addition, its normalized net income increased at 43.9% CAGR over the past three years.
Over the past six months, the stock has gained 39.6%, closing the last trading session at $233.14.
AMZN’s POWR Ratings reflect this robust outlook. The stock has an overall rating of B, which equates to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
AMZN has an A grade for Sentiment and a B for Growth, Momentum, and Quality. It is ranked #11 out of 48 stocks in the A-rated Internet industry. Click here to see the additional ratings for AMZN (Value and Stability).
Alibaba Group Holding Limited (BABA)
Based in Hangzhou, China, BABA provides technology infrastructure and marketing platforms to help merchants, brands, retailers, and other businesses engage with their users and customers globally. The company operates through seven segments: China Commerce; International Commerce; Local Consumer Services; Cainiao; Cloud; Digital Media and Entertainment; and Innovation Initiatives and Others.
In the fiscal second quarter that ended on September 30, 2024, BABA’s consolidated revenue increased 5.2% year-over-year to $33.70 billion. The company reported income from operations of $5.02 billion, indicating a 4.9% growth from the prior-year quarter. Its net income came in at $6.21 billion, up 63.1% year-over-year, while its earnings per ADS grew 68.7% from the prior-year quarter to $2.59.
Street expects BABA’s revenue for the fiscal third quarter (ended December 2024) to increase 5.4% year-over-year to $38.16 billion. Its EPS for the same period is expected to register a 2.3% growth from the prior year, settling at $2.70.
Over the past three and five years, BABA’s revenue grew at CAGRs of 5.7% and 16.7%, respectively, while its EBIT grew at 9.1% CAGR over the past five years.
BABA’s shares have surged 54.6% over the past year and 39.2% over the past nine months to close the last trading session at $111.32.
BABA’s POWR Ratings reflect its positive outlook. The stock has an overall rating of B, which equates to a Buy in our proprietary rating system.
It also has a B grade for Growth, Momentum, Sentiment, and Quality. In the 41-stock A-rated China industry, it is ranked #9. To see BABA’s Value and Stability ratings, click here.
Sea Limited (SE)
Headquartered in Singapore, SE engages internationally in digital entertainment, e-commerce, and digital financial service businesses. The company provides a Garena digital entertainment platform to access online games, eSports operations, and other entertainment content, as well as a Shopee e-commerce platform for integrated payment and logistics infrastructure and seller services.
During the fiscal third quarter that ended on September 30, 2024, SE’s revenue increased 30.8% year-over-year, amounting to $4.33 billion. Its gross profit amounted to $82.89 million, increasing 29.1% year-over-year. Its operating income came in at $202.42 million compared to the year-ago net loss of $127.74 million.
In addition, the company’s net income stood at $153.32 million compared to the prior-year quarter’s loss of $143.98 million, while its EPS came in at $0.24 versus a loss of $0.26 per share last year. Also, the total adjusted EBITDA rose significantly from the prior year’s quarter to $521.34 million.
The consensus revenue estimate of $4.64 billion for the fiscal fourth quarter (ended December 2024) represents a 28.4% increase year-over-year. The consensus EPS estimate of $0.69 for the ongoing quarter indicates a significant improvement year-over-year. The company has an excellent earnings surprise history; it surpassed the consensus revenue estimates in each of the trailing four quarters.
SE’s revenue has grown at CAGRs of 23.1% and 55.9% over the past three and five years, respectively. Likewise, the company’s total assets have increased at a CAGR of 39.7% over the past five years.
The stock has gained 187.9% over the past year and 93.2% over the past six months to close the last trading session at $125.28.
SE’s bright prospects are reflected in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.
It also has an A grade for Growth and a B for Momentum, Sentiment, and Quality. Within the A-rated Internet industry, it is ranked #21 out of 48 stocks. Click here to see SE’s ratings for Value and Stability.
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AMZN shares were trading at $231.83 per share on Tuesday afternoon, down $1.31 (-0.56%). Year-to-date, AMZN has gained 5.67%, versus a 3.05% rise in the benchmark S&P 500 index during the same period.
About the Author: ShreyaRathi
