E-commerce may be one of the fastest technological, economic, and societal trends of this decade. With many people spending more time at home due to the pandemic, e-commerce stocks have seen significant growth this year. With obvious e-commerce stocks like Amazon, Wayfair, and Shopify already seeing momentous triple-digit runs, investors may feel like they have missed out on the stalwarts of this trend.
Yet, with a little creativity, you can create a mini e-commerce stock portfolio that gives you growth and income today. Got $1,000? Here are my three top e-commerce stock picks for the rest of 2020.
E-commerce innovation stock: Lightspeed POS
While Shopify has had an epic 153% gain year to date, its smaller competitor Lightspeed POS (TSX:LSPD) has lagged with only a 14% gain. While they are different businesses, Lightspeed is making e-commerce inroads in some interesting places.
Lightspeed’s customer base is split between retail and hospitality/restaurant merchants. It provides omni-channel point-of-sales and business operations systems. When the pandemic hit, Lightspeed actually saw a serious rise in customer demand. Merchants needed flexible sales solutions that could quickly integrate online/e-commerce into their business models.
Lightspeed continues to expand its e-commerce platform. It has added new levels of functionality and has had strong merchant adoption since the pandemic. Just yesterday, Lightspeed launched “eCom for Restaurant.” This application is helping restaurateurs adapt to the challenges presented by the pandemic. It helps restaurants by integrating digital menus, delivery options, table bookings, loyalty programs, and even Instagram into their business operations.
Lightspeed is enabling store-front businesses to quickly adapt to the digital world. As a result, I think this e-commerce stock has many years of growth ahead.
E-delivery stock: Cargojet
Cargojet (TSX:CJT) is another intriguing e-commerce stock. While this stock is not cheap by any means (a forward P/E of 43, and an enterprise value/EBITDA of 27), it is a crucial transporter of air cargo and e-commerce products across Canada. In fact, it dominates about 90% of the Canadian overnight cargo market.
Cargojet is the only airline in Canada that Amazon actually owns a 10% stake in. Since Amazon is the largest e-commerce player, Cargojet has a very strong competitive position in Canada.
With reduced international passenger volumes (perhaps for far longer than anyone expected), Cargojet has acquired a number of international cargo routes formerly dominated by passenger carriers. As a result, it has seen a significant boost in international charter demand.
As well, “next-day” delivery demand is becoming the e-commerce gold standard. Consequently, Cargojet’s network expertise and partnerships make it the carrier of choice for providing these programs. Cargojet has a really solid, highly contracted (over 75% of revenues) business model. As a result, I believe this stock still has a strong runway higher.
E-commerce real estate stock: WPT Industrial REIT
Although not a pure-play “e-commerce” stock, WPT Industrial REIT (TSX:WIR.U) is set up to benefit from e-commerce growth. WPT owns 102 industrial, logistics, and distribution properties across the United States. These properties are strategically located in key distribution hubs, and they play a vital role in the storage and distribution of e-commerce goods. WPT’s top tenants include the likes of Fedex, Ikea, General Mills, and Amazon.
Despite the pandemic, WPT has demonstrated very strong operational results. In its second quarter, it collected 99.5% of rents and actually saw occupancy rise to 97.4%. The REIT has a strong development pipeline supported some high-grade institutional partners. I believe it is an inflection point to start accreting significant AFFO growth going forward.
This REIT pays an attractive 5.7% yield. If you want to some e-commerce-focused income, this is one stock you want to hold!
This one stock could potentially match the returns of Shopify. Don't wait to check it out...
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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Fool contributor Robin Brown owns shares of Amazon, Lightspeed POS Inc, and WPT INDUSTRIAL REIT USD. David Gardner owns shares of Amazon and FedEx. Tom Gardner owns shares of Shopify. The Motley Fool owns shares of and recommends Amazon, CARGOJET INC., FedEx, Shopify, and Wayfair. The Motley Fool owns shares of Lightspeed POS Inc and recommends the following options: short January 2022 $1940 calls on Amazon and long January 2022 $1920 calls on Amazon.