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5 Online Retailers to Buy Despite Weak Holiday Retail Sales
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The U.S. retail holiday sales season for fiscal 2023-24 is over. The first post-sales estimate has come from Mastercard SpendingPulse, which reported that holiday retail sales for the period of Nov 1 to Dec 24, increased 3.1% year over year, missing the previous estimate of 3.7%. Online retail sales were up by 6.3% year over year, lagging the prior estimate of 6.7%. In-store sales recorded a year-over-year increase of 2.2%, below the prior estimate of 2.9%.
On the other hand, the industry body — The National Retail Federation (NRF) — provided a rosy picture. However, these are estimates and not actual sales. NRF projected that U.S. holiday retail sales in 2023 will grow 3-4% year over year to $957.3-$966.6 billion.
Positives of E-commerce
Internet - Commerce continues to evolve as the technologies driving it progress. On the one side are increasingly powerful and capable user devices. On the other are sophisticated, AI-enabled software platforms facilitating transactions more capable of delivering user satisfaction.
Differentiation comes from better technology for improved showcasing, easier navigation and payment, speedier delivery and returns, brand building, comparison shopping, loyalty, etc., as well as more shipping options, which generally tip the scales in favor of larger players.
Within the Retail sector, the Zacks-defined Internet-Commerce industry is currently in the top 28% of the Zacks Industry Rank. In the past year, the industry has provided 41.7% returns. Since it is ranked in the top half of Zacks Ranked Industries, we expect the e-commerce industry to outperform the market over the next 3 to 6 months.
Our Top Picks
We have narrowed our search to five e-commerce stocks with strong potential for 2024. These stocks have seen positive earnings estimate revisions in the last 30 days. Each of our picks currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The chart below shows the price performance of our five picks in the past month.
Image Source: Zacks Investment Research
Amazon.com Inc. (AMZN - Free Report) has been benefiting from a strengthening AWS services portfolio and its growing adoption rate has contributed well. Ultrafast delivery services and an expanding content portfolio are positives for AMZN. The strengthening relationship with third-party sellers is also encouraging. Its advertising business is also making a robust contribution. Improving Alexa skills along with robust smart home product offerings are tailwinds for AMZN.
Amazon has an expected revenue and earnings growth rate of 11.7% and 34%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 2% over the last 30 days.
Wayfair Inc.’s (W - Free Report) prospects are driven by its wide product range and brand offerings which include the likes of Wayfair, Joss & Main, AllModern, Birch Lane, Perigold and Wayfair Professional. W’s focus on infusing and leveraging advanced technology including generative AI into its business model has boosted the efficiency of its operations.
W’s robust storefront tools and systems, operations software, and strong advertising tools such as campaign management and bidding algorithms for online advertising, have been helping it in expanding its reach to target customers.
Wayfair has an expected revenue and earnings growth rate of 4.3% and more than100%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved more than 100% over the last 60 days.
Rover Group Inc. operates an online marketplace for pet care worldwide. ROVR connects pet parents with pet providers who offer overnight services, including boarding and in-home pet sitting, as well as daytime services, such as doggy daycare, dog walking, drop-in visits, grooming, and training.
Rover Group has an expected revenue and earnings growth rate of 22.9% and more than 100%, respectively, for next year. The Zacks Consensus Estimate for next-year earnings has improved more than 100% over the last 60 days.
Groupon Inc. (GRPN - Free Report) is benefiting from its rising initiatives to simplify infrastructure through new applications. GRPN’s growing efforts to improve deal recommendation and quality assurance on the back of AI is a tailwind. GRPN’s cost reductions, driven by decreasing payroll costs, traffic declines and investments in online marketing spend, are contributing well.
Groupon has an expected revenue and earnings growth rate of 3% and more than 100%, respectively, for the current year. The Zacks Consensus Estimate for next-year earnings has improved more than 100% over the last 60 days.
1stdibs.Com Inc. (DIBS - Free Report) operates an online marketplace for vintage, antique, and contemporary furniture, home décor, jewelry, watches, art, and fashion products worldwide. DIBS offers an online marketplace that enables commerce between sellers and buyers.
1stdibs.Com has an expected earnings growth rate of 23% for the current year. The Zacks Consensus Estimate for next-year earnings has improved 35.6% over the last 60 days.
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5 Online Retailers to Buy Despite Weak Holiday Retail Sales
The U.S. retail holiday sales season for fiscal 2023-24 is over. The first post-sales estimate has come from Mastercard SpendingPulse, which reported that holiday retail sales for the period of Nov 1 to Dec 24, increased 3.1% year over year, missing the previous estimate of 3.7%. Online retail sales were up by 6.3% year over year, lagging the prior estimate of 6.7%. In-store sales recorded a year-over-year increase of 2.2%, below the prior estimate of 2.9%.
On the other hand, the industry body — The National Retail Federation (NRF) — provided a rosy picture. However, these are estimates and not actual sales. NRF projected that U.S. holiday retail sales in 2023 will grow 3-4% year over year to $957.3-$966.6 billion.
Positives of E-commerce
Internet - Commerce continues to evolve as the technologies driving it progress. On the one side are increasingly powerful and capable user devices. On the other are sophisticated, AI-enabled software platforms facilitating transactions more capable of delivering user satisfaction.
Differentiation comes from better technology for improved showcasing, easier navigation and payment, speedier delivery and returns, brand building, comparison shopping, loyalty, etc., as well as more shipping options, which generally tip the scales in favor of larger players.
Within the Retail sector, the Zacks-defined Internet-Commerce industry is currently in the top 28% of the Zacks Industry Rank. In the past year, the industry has provided 41.7% returns. Since it is ranked in the top half of Zacks Ranked Industries, we expect the e-commerce industry to outperform the market over the next 3 to 6 months.
Our Top Picks
We have narrowed our search to five e-commerce stocks with strong potential for 2024. These stocks have seen positive earnings estimate revisions in the last 30 days. Each of our picks currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The chart below shows the price performance of our five picks in the past month.
Image Source: Zacks Investment Research
Amazon.com Inc. (AMZN - Free Report) has been benefiting from a strengthening AWS services portfolio and its growing adoption rate has contributed well. Ultrafast delivery services and an expanding content portfolio are positives for AMZN. The strengthening relationship with third-party sellers is also encouraging. Its advertising business is also making a robust contribution. Improving Alexa skills along with robust smart home product offerings are tailwinds for AMZN.
Amazon has an expected revenue and earnings growth rate of 11.7% and 34%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 2% over the last 30 days.
Wayfair Inc.’s (W - Free Report) prospects are driven by its wide product range and brand offerings which include the likes of Wayfair, Joss & Main, AllModern, Birch Lane, Perigold and Wayfair Professional. W’s focus on infusing and leveraging advanced technology including generative AI into its business model has boosted the efficiency of its operations.
W’s robust storefront tools and systems, operations software, and strong advertising tools such as campaign management and bidding algorithms for online advertising, have been helping it in expanding its reach to target customers.
Wayfair has an expected revenue and earnings growth rate of 4.3% and more than100%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved more than 100% over the last 60 days.
Rover Group Inc. operates an online marketplace for pet care worldwide. ROVR connects pet parents with pet providers who offer overnight services, including boarding and in-home pet sitting, as well as daytime services, such as doggy daycare, dog walking, drop-in visits, grooming, and training.
Rover Group has an expected revenue and earnings growth rate of 22.9% and more than 100%, respectively, for next year. The Zacks Consensus Estimate for next-year earnings has improved more than 100% over the last 60 days.
Groupon Inc. (GRPN - Free Report) is benefiting from its rising initiatives to simplify infrastructure through new applications. GRPN’s growing efforts to improve deal recommendation and quality assurance on the back of AI is a tailwind. GRPN’s cost reductions, driven by decreasing payroll costs, traffic declines and investments in online marketing spend, are contributing well.
Groupon has an expected revenue and earnings growth rate of 3% and more than 100%, respectively, for the current year. The Zacks Consensus Estimate for next-year earnings has improved more than 100% over the last 60 days.
1stdibs.Com Inc. (DIBS - Free Report) operates an online marketplace for vintage, antique, and contemporary furniture, home décor, jewelry, watches, art, and fashion products worldwide. DIBS offers an online marketplace that enables commerce between sellers and buyers.
1stdibs.Com has an expected earnings growth rate of 23% for the current year. The Zacks Consensus Estimate for next-year earnings has improved 35.6% over the last 60 days.