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5 Stocks to Buy as E-Commerce Powers Retail Sector Growth

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E-commerce has been helping the retail sector throughout the pandemic. Although things have somewhat come back to normal and restrictions are being eased, people over the past year have become used to shopping online given the convenience and safety.

Given this scenario, e-commerce is likely to continue its dominance in the coming months and in the future too. According to a new report from eMarketer, e-commerce sales in 2021 are projected to exceed even the pre-pandemic estimates.

E-commerce Helping Retail Sector

Last year saw most people staying at home and shopping online as shops remained closed initially following the coronavirus outbreak. Then, consumers refrained from visiting stores to avoid getting contracted by the virus. This saw e-commerce not only driving retail sales for the most part of the year but also saving it from a collapse.

Per a new report from eMarketer, online sales grew 33.6% in 2020 to reach $799.18 billion. E-commerce was already giving brick-and-mortar stores a tough run for their money and the pandemic helped it gain further prominence.

According to the report, the predictions were that people would spend $674.88 billion on online shopping in 2020, suggesting an increase of 13.2% from 2019. Crushing the estimate, growth had zoomed to $799.18 billion by the end of 2020.

In fact, non-e-commerce sales contracted 0.2% in 2020, declining for the first time since the Great Depression. This means that consumers bought around $12 billion less of goods from physical stores compared to 2019.

E-Commerce Poised to Grow

The report further says that as restrictions ease, people will start visiting physical stores in 2021, which will definitely push up their sales. Although e-commerce might not grow at a pace like that of 2020, overall sales growth will continue to build on the upward revision from 2020.

E-commerce sales are projected to grow 13.7% in 2021, reaching $908.73 billion or $147 billion more than what was expected before the pandemic struck. Prior to the pandemic, e-commerce sales were projected to grow 12.8% to $761.26 billion in 2021 but increased dependency has now changed the entire picture.

Moreover, before the pandemic, e-commerce was projected to make up for 13.2% of the total retail sales of $5.779 trillion in 2021. However, it is now expected to account for 15.5%.

In 2022, e-commerce sales are expected to cross the $1 trillion mark and reach $1.045 trillion. Earlier, the $1 trillion mark was being expected for 2024.

Our Choices

New cases of COVID-19 have somewhat been on the decline and three vaccines are already in the market. Nonetheless, online shopping will continue to be a safe bet for millions given its safety and convenience. This is thus the right opportunity to invest in retail stocks that have a strong online presence.

Conns, Inc. (CONN - Free Report) sells major home appliances, including refrigerators, freezers, washers, dryers and ranges, and a variety of consumer electronics, including projection, plasma and LCD televisions, camcorders, VCRs, DVD players and home theater products. 

The company’s expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for current-year earnings has improved 25.4% over the past 60 days. Conns sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Levi Strauss & Co. (LEVI - Free Report) designs and markets jeans, casual wear and related accessories for men, women and children under the Levi's, Dockers, Signature by Levi Strauss & Co. and Denizen brands. 

The company’s expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for current-year earnings has improved 14.4% over the past 60 days. Levi Strauss sports a Zacks Rank #1.

L Brands, Inc. evolved from an apparel-based specialty retailer to a segment leader focused on women’s intimate and other apparel, personal care, beauty and home fragrance products. 

The company’s expected earnings growth rate for the current year is 56.7%. The Zacks Consensus Estimate for current-year earnings has improved 29.7% over the past 60 days. L Brands has a Zacks Rank #2 (Buy).

Target Corporation (TGT - Free Report) has evolved from just being a pure brick & mortar retailer to an omni-channel entity. The company has been investing in technologies, improving websites and mobile apps, and modernizing the supply chain to keep pace with the changing retail landscape and better compete with pure e-commerce players.

The company’s expected earnings growth rate for next year is 10.9%. The Zacks Consensus Estimate for current-year earnings has improved 3.5% over the past 60 days. Target carries a Zacks Rank #2.

Sally Beauty Holdings, Inc. (SBH - Free Report) is an international specialty retailer and distributor of professional beauty supplies. It is amongst one of the largest distributors of beauty products in the United States.

The company’s expected earnings growth rate for next year is 81.2%. The Zacks Consensus Estimate for current-year earnings has improved 30% over the past 60 days. Sally Beauty Holdings has a Zacks Rank #2.

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