Coronavirus Sparks E-Commerce Frenzy: Stocks on Fire
E-commerce has been witnessing an unprecedented spike buoyed by the COVID-19 pandemic. This is especially true as lockdown and social distancing has resulted in forced closure of malls and retail stores.
E-commerce sales climbed at the highest pace since late February, jumping 25% during the week ending Apr 20, according to Signifyd’s E-commerce Pulse data. The jump surpassed the previous record of 17% for the week ending Apr 6. Overall, there has been an increase of 85% in ecommerce spending since late February. According to the market research firm Rakuten Intelligence, e-commerce spending in the United States is up more than 30% from the beginning of March through mid-April compared with the same period last year.
Online grocery sales were the least investor favorite, but have emerged as the hottest category during the epidemic. According to Nielsen and Rakuten Intelligence, U.S. online sales of consumer-packaged goods (CPG) — the kind of items typically sold in grocery stores — grew 56% for the week ending Apr 18. Food topped the list, with sales soaring 69.5% year over year, followed by a 57.5% surge in online sales of household care items and growth in the health and beauty care (47.7%), baby care (27.2%) and pet care (22.3%) categories. Per Namogoo, online supermarket visits were up 162% from the year-ago levels in March and up 146% from February 2020.
Further, growing demand for entertainment and work from home has led to the rise in e-commerce sales. People staying home are watching movies, playing games and working remotely, thereby leading to increased need for video streaming services, video games and cloud computing services.
The rampant digital shift is likely to last longer than expected even after the economy reopens. Given the booming trends, several companies in the e-commerce segment are seeing a huge surge in their stock prices over the past month. The stocks have a Zacks Rank # 1 (Strong Buy), 2 (Buy) or 3 (Hold), suggesting that the strong trend might continue going into the Q1 earnings announcement. You can see the complete list of today’s Zacks #1 Rank stocks here.
Below, we have highlighted them:
Wayfair Inc. W
The company is one of the world's leading online sellers of home goods products, consisting of furniture and home decor. Wayfair has more than quintupled off a March low, having surged more than 400% over the period.
Wayfair, which is scheduled to release its earnings on May 5 before market open, has a Zacks Rank #2 and Earnings ESP of +1.67%, indicating a higher chance of beating estimates this quarter. According to our methodology, the combination of a positive Earnings ESP and a Zacks Rank #1, 2 or 3 increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Amazon.com Inc. AMZN
This is one of the largest e-commerce providers, with sprawling operations in North America, now spreading across the globe. Bloomberg stated that Amazon is the top-most, high-profile winner in the current environment. Shares of AMZN jumped more than 48% from a low hit last month and have nearly overtaken Apple (APPL) in market capitalization. Goldman believes that the pandemic would “steepen the curve of Amazon’s long-term growth rate, drive incremental profitability, and further deepen the competitive moat around all of its businesses.”
Amazon is expected to release its earnings on Apr 30 after market close. The stock has a Zacks Rank #3 and Earnings ESP of +5.11%, indicating a reasonable chance of beating estimates this quarter.
eBay Inc. EBAY
eBay operates as an online shopping site that allows visitors to browse through available products listed for sale or auction through each company's online storefront. The stock has risen more than 50% from a low hit last month. Most analysts upgraded the target price on the stock, citing the company as a direct beneficiary of the coronavirus economic shutdown.
The company, slated to report on Apr 29 after market close, has a Zacks Rank #3 and an Earnings ESP of 0.00%.
Shopify Inc. SHOP
This company provides a multi-tenant, cloud-based, multi-channel commerce platform for small and medium-sized businesses. Shopify is up nearly 111% from a low hit last month, becoming one of the most valuable companies in Canada. It has a Zacks Rank #2 and an Earnings ESP of +5.85%. Shopify is expected to release earnings on May 6 before market open and has gained more than 26% in a month.
Etsy Inc. ETSY
It offers e-commerce services that provide online and offline marketplaces to buy and sell goods. The stock is up 121% from the lows hit last month. Etsy has a Zacks Rank #2 and an Earnings ESP of +8.17%. It is scheduled to release earnings on May 6.
MercadoLibre Inc. MELI
It is one of the largest e-commerce platforms in Latin America. The company is a market leader in e-commerce in Brazil, Argentina, Colombia, Chile, Ecuador, Costa Rica, Peru, Mexico, Venezuela and Uruguay based on unique visitors and page views. The stock has gained 26.1% from a low hit last month. MercadoLibre has a Zacks Rank #3 and an Earnings ESP of 0.00%. It is expected to release earnings on May 5.
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