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E-Commerce a COVID-19 Lifeline for Retailers: Stocks to Gain
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As life has been confined to indoors for over a year now due to the COVID-19 pandemic, activities necessary to support life from earning money and spending increasingly moved to online.
In a nutshell, COVID-19 gave a massive push to virtual shopping as people were restricted from going outside in the initial period of the COVID-19 outbreak and currently, more out of convenience and habit.
Per Mastercard’s latest Recovery Insights report, an additional $900 billion was spent on online retailing around the world in 2020. Last year, e-commerce accounted for roughly $1 of every $5 spent on retail, up from about $1 of every $7 spent in 2019.
To be able to move sales online provided a much-needed cushion to the businesses of retailers, restaurants, and other large and small entities. According to Mastercard’s Recovery Insights: Commerce E-volution, nearly 20-30% of the COVID-related shift to the digital mode on a global scale is expected to be permanent.
The report states that the early adopters of digital modes of sales gain from first mover advantage. Economies, such as the United States and the U.K., which already had decent e-commerce capabilities even before the pandemic hit the face of the earth, were able to sail through the troubled waters way better than the laggards like Argentina and Mexico. The Asia Pacific, North America and Europe were the strongest regions in driving the e-commerce uptake.
Since shopping for necessary items take precedence over discretionary products, therefore digital gains for grocery and discount store turned out to be more stickier. Also, it is that 70-80% of the grocery e-commerce surge is anticipated to stay here as consumers found a new habit of comfortable shopping from home.
International e-commerce shot up 25-30% year over year from March 2020 through February 2021 as shoppers all over the world placed online orders with much wider choices at their disposal.
Also, consumers across the world are increasingly seeking and trying their shopping experience on a greater number of websites and at online marketplaces than ever before. Residents in countries like Italy and Saudi Arabia are buying more from online stores with 33% growth rate, on average, followed closely by Russia and the UK.
This transition to e-commerce is driving electronic payments. Though it is obvious that online purchases are mostly made via electronic means, such as netbanking, mobile payment or cards etc. Also, at physical stores, cashless payments inched up an additional 2.5% beyond the ongoing trend, thereby accelerating the swing from cash to electronic payments throughout a year that saw lockdowns and travel embargos due to social distancing triggered by the pandemic prevalence.
Our Stock Picks
With these new trends emerging and gradually making a permanent impression on our lives, we zero in on some of the stocks that are sure to gain in the medium to long term.
Brooklyn, NY-based Etsy, Inc. (ETSY - Free Report) is primarily an e-commerce service provider, which operates a two-sided marketplace platform called Etsy.com. It allows various merchants to list and sell their unique and creative products belonging to categories like homewares and home furnishings, jewelry and personal accessories, apparel, craft supplies, paper and party supplies, and beauty and personal care via its marketplace platform.
Etsy is benefiting from accelerating Marketplace and Services revenues. A solid momentum across active sellers and buyers remains a major positive. Further, the coronavirus-led e-commerce boom and increasing mask sales are tailwinds. Additionally, the company is witnessing a solid traction from reactivated buyers, which is contributing well to growth. Besides, enhancements in search and discovery are driving its momentum among its buyers. Moreover, a robust Etsy ad program is aiding its seller base growth.
Ethan Allen Interiors Inc. is a leading interior design company, and manufacturer and retailer of quality home furnishings. The company offers free interior design service to its clients and sells a full range of furniture products and decorative accessories through ethanallen.com and a network of the Design Centers in the United States and abroad.
The company’s expected earnings growth rate for the current year is 244%. The Zacks Consensus Estimate for 2021 earnings has improved 49.2% over the past 90 days. Ethan Allen sports a Zacks Rank #3 (Hold) at present.
Packaging Corporation of America (PKG - Free Report) manufactures and sells containerboard and corrugated packaging products in the United States. Notably, the company offers e-commerce packaging solutions and its e-commerce website allows users to access a catalog of packaging designs. The Zacks Consensus Estimate for its current-year earnings increased 0.4% over the past 60 days. The company’s expected earnings growth rate for the current year is 16.4%. The stock carries a Zacks Rank #3 at present.
PayPal Holdings, Inc. (PYPL - Free Report) emerged as one of the largest online payment solutions providers on the back of its strong product portfolio and a two-sided platform, enabling it to offer a smooth and secure transaction facility to both its customers and merchants.
The company employs a technology and platform agnostic approach to allow merchants of all sizes to quickly and easily provide a digital checkout online, on mobile devices and in-store across all platforms and devices and to securely and seamlessly receive payments from their customers.
The company currently has a Zacks Rank #3 (Hold). Its expected earnings growth rate for the current year is 17.8% against its industry’s expected decrease of 1.2%
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
Image: Bigstock
E-Commerce a COVID-19 Lifeline for Retailers: Stocks to Gain
As life has been confined to indoors for over a year now due to the COVID-19 pandemic, activities necessary to support life from earning money and spending increasingly moved to online.
In a nutshell, COVID-19 gave a massive push to virtual shopping as people were restricted from going outside in the initial period of the COVID-19 outbreak and currently, more out of convenience and habit.
Per Mastercard’s latest Recovery Insights report, an additional $900 billion was spent on online retailing around the world in 2020. Last year, e-commerce accounted for roughly $1 of every $5 spent on retail, up from about $1 of every $7 spent in 2019.
To be able to move sales online provided a much-needed cushion to the businesses of retailers, restaurants, and other large and small entities.
According to Mastercard’s Recovery Insights: Commerce E-volution, nearly 20-30% of the COVID-related shift to the digital mode on a global scale is expected to be permanent.
The report states that the early adopters of digital modes of sales gain from first mover advantage. Economies, such as the United States and the U.K., which already had decent e-commerce capabilities even before the pandemic hit the face of the earth, were able to sail through the troubled waters way better than the laggards like Argentina and Mexico. The Asia Pacific, North America and Europe were the strongest regions in driving the e-commerce uptake.
Since shopping for necessary items take precedence over discretionary products, therefore digital gains for grocery and discount store turned out to be more stickier. Also, it is that 70-80% of the grocery e-commerce surge is anticipated to stay here as consumers found a new habit of comfortable shopping from home.
International e-commerce shot up 25-30% year over year from March 2020 through February 2021 as shoppers all over the world placed online orders with much wider choices at their disposal.
Also, consumers across the world are increasingly seeking and trying their shopping experience on a greater number of websites and at online marketplaces than ever before. Residents in countries like Italy and Saudi Arabia are buying more from online stores with 33% growth rate, on average, followed closely by Russia and the UK.
This transition to e-commerce is driving electronic payments. Though it is obvious that online purchases are mostly made via electronic means, such as netbanking, mobile payment or cards etc. Also, at physical stores, cashless payments inched up an additional 2.5% beyond the ongoing trend, thereby accelerating the swing from cash to electronic payments throughout a year that saw lockdowns and travel embargos due to social distancing triggered by the pandemic prevalence.
Our Stock Picks
With these new trends emerging and gradually making a permanent impression on our lives, we zero in on some of the stocks that are sure to gain in the medium to long term.
Brooklyn, NY-based Etsy, Inc. (ETSY - Free Report) is primarily an e-commerce service provider, which operates a two-sided marketplace platform called Etsy.com. It allows various merchants to list and sell their unique and creative products belonging to categories like homewares and home furnishings, jewelry and personal accessories, apparel, craft supplies, paper and party supplies, and beauty and personal care via its marketplace platform.
Etsy is benefiting from accelerating Marketplace and Services revenues. A solid momentum across active sellers and buyers remains a major positive. Further, the coronavirus-led e-commerce boom and increasing mask sales are tailwinds. Additionally, the company is witnessing a solid traction from reactivated buyers, which is contributing well to growth. Besides, enhancements in search and discovery are driving its momentum among its buyers. Moreover, a robust Etsy ad program is aiding its seller base growth.
The company currently flaunts a Zacks Rank of 1. Its expected long-term earnings growth rate is 25.3% compared with its industry’s growth of 22.2%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Ethan Allen Interiors Inc. is a leading interior design company, and manufacturer and retailer of quality home furnishings. The company offers free interior design service to its clients and sells a full range of furniture products and decorative accessories through ethanallen.com and a network of the Design Centers in the United States and abroad.
The company’s expected earnings growth rate for the current year is 244%. The Zacks Consensus Estimate for 2021 earnings has improved 49.2% over the past 90 days. Ethan Allen sports a Zacks Rank #3 (Hold) at present.
Packaging Corporation of America (PKG - Free Report) manufactures and sells containerboard and corrugated packaging products in the United States. Notably, the company offers e-commerce packaging solutions and its e-commerce website allows users to access a catalog of packaging designs.
The Zacks Consensus Estimate for its current-year earnings increased 0.4% over the past 60 days. The company’s expected earnings growth rate for the current year is 16.4%. The stock carries a Zacks Rank #3 at present.
PayPal Holdings, Inc. (PYPL - Free Report) emerged as one of the largest online payment solutions providers on the back of its strong product portfolio and a two-sided platform, enabling it to offer a smooth and secure transaction facility to both its customers and merchants.
The company employs a technology and platform agnostic approach to allow merchants of all sizes to quickly and easily provide a digital checkout online, on mobile devices and in-store across all platforms and devices and to securely and seamlessly receive payments from their customers.
The company currently has a Zacks Rank #3 (Hold). Its expected earnings growth rate for the current year is 17.8% against its industry’s expected decrease of 1.2%
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>