The economy is improving, consumer spending is high, and we are optimistic about a new year. This is an opportunity to grab stocks with strong upside potential and could make gains in the coming year. With the transition into the digital world and a growing market share of e-commerce companies, it is time to look for e-commerce stocks that can redefine online shopping. With that in mind, let’s take a look at the three e-commerce stocks worth adding to your portfolio.
Amazon (NASDAQ:AMZN) is a global giant today. The company started as a book lender and now offers any product. Besides offering a wide range of products, Amazon is known for streaming and data center services. The stock hit a new high during the pandemic, suffered in 2022, and rebounded in 2023.
Today, it is one of the best online shopping stocks to own. AMZN stock is up 78% year to date and is exchanging hands for $153. It is nearing the 52-week high, and the stock isn’t cheap, but it is worth your money. Amazon stock is set to soar higher in 2024, and its fourth-quarter results will be impressive, driven by the holiday sales.
In the third quarter, it reported a 13% year-over-year increase in net sales; the net income came in at $9.9 billion. One of its biggest revenue drivers, Amazon Web Services (AWS),, is growing significantly. That said, the company also saw a strong rise in advertising revenue, and as organizations set higher marketing budgets for 2024, Amazon will see steady growth in this segment.
People no longer need to use a search engine to look for products; they can head to Amazon and decide what to purchase. The company has been using Artificial Intelligence for a while now, offering personalized product recommendations to make purchases easier. Amazon has also invested $4 billion in Anthropic, an AI startup, to advance generative AI.
Needham analyst named Amazon a top 2024 pick, while Wedbush has raised its price target to $210 with a buy rating. An improvement in the macroeconomic environment will benefit Amazon stock, and I believe it is one of the best buys right now.
Not investing in Shopify (NYSE:SHOP) is losing out on massive gains. It is one of my favorite e-commerce stocks this year. The e-commerce platform has enabled several online stores to sell products through its monthly subscriptions. This has helped the business ensure annual recurring revenue that one can count on. Several businesses will continue to pay the monthly subscription since switching could mean losing business.
Up 115% year to date, SHOP stock is exchanging hands for $76, and it has the potential to double in 2024. It has generated over 450% returns over the past five years and is only getting stronger.
The company only incurs a small cost to serve the consumers, allowing it to enjoy a higher profit. Its asset-light business is a huge success. In the third quarter, its revenue stood at $1.7 billion, up 25% yearly, and the operating margin was 7%. It reported the fourth consecutive quarter of positive cash flow.
I believe this is only the beginning of the e-commerce giant. It still has a long way to go. Shopify is putting money into the business to increase sales for the merchants, and the effort has already paid off. The platform saw its best Black Friday sales ever and made $4.1 billion.
Shopify’s business model and sustainable revenue growth will give it a good start in 2024. It can attract and retain merchants, which means it will continue generating money in the long run.
One of the largest retailers in the world, Walmart (NYSE:WMT) is a global name and an ideal shopping destination for those looking for low-cost goods. It has seen a steady rise in consumer traffic and an improvement in average spending, reflected in the financials.
In the third quarter, the company saw a 15% year-over-year rise in e-commerce growth, and it also reported higher growth in the international retail segment as compared to U.S. sales. After a strong quarter, the company expects an even better 2023. It expects the sales to increase by 5% to 5.5% from the previous guidance of 4% to 4.5%.
Walmart was recently in the news for the expansion of its partnership with Affirm (NASDAQ:AFRM), a buy now pay later platform. This will enable BNPL transactions at its self-checkout kiosks. The stock also enjoys a dividend yield of 1.46% and pays a quarterly dividend of $0.57.
The holiday period will impact its fourth-quarter sales, and investors can expect strong numbers in the coming year. The profit margin is increasing, traffic is strong, and consumer spending is improving, ensuring a steady upside for WMT stock.
Trading at $156 today, the stock is up 9% year to date but is trading much lower than the 52-week high of $169. This shows a modest upside potential from here, and any dip in the stock is a good chance to buy. It’s therefore one of those e-commerce stocks to consider.
On the date of publication, Vandita Jadeja did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.