3 Top E-Commerce Stocks to Buy in November 2022

Amazon (NASDAQ:AMZN), Shopify (TSX:SHOP)(NYSE:SHOP), and Etsy (NASDAQ:ETSY) are three top e-commerce stocks to buy in November.

| More on:

Amazon (NASDAQ:AMZN), Shopify (TSX:SHOP), and Etsy (NASDAQ:ETSY) dominate e-commerce and have bright futures. These top e-commerce stocks are worth considering this month.

Amazon

Amazon leads the retail e-commerce segment in the United States, with an estimated 37.8% market share in June. This is significantly higher than the 6.3% share held by Walmart in second place.

Amazon’s valuable brand name enables it to attract customers who frequently return for the perks. The company provides free one-day or two-day shipping on thousands of items that are typically less expensive than those found on other platforms.

Amazon, like many other e-commerce stocks, benefits from the network effect, as the value of its platform grows with more users. Online merchants seeking a large customer base will gravitate toward the largest platforms, one of which is Amazon. And as the number of merchants on its website grows, so does the number of customers.

Amazon will benefit from increased e-commerce adoption because of the strong lead it has already established. And those who invest in this company benefit from more than just its e-commerce operations. Amazon’s high-margin cloud computing division is on fire. The company also leads the cloud industry — a market that is expanding rapidly.

Amazon has not been immune to the recent downturn. Its e-commerce division has been particularly hard hit. However, with leadership in two major industries poised for growth, the tech giant can turn things around and return to market-beating form, making it an excellent stock to buy and hold for the foreseeable future, particularly at current levels.

Shopify

Shopify is used by over two million merchants in 175 countries to process orders and manage their online storefronts. This is nearly double the number of merchant users in 2018. As more merchants sign up to use Shopify’s valuable selling tools, the company’s reputation as a go-to checkout solution grows.

However, the stock price has dropped due to difficult year-over-year growth comparisons to accelerated online shopping in 2020 and 2021. While it would have been impossible to keep growing subscription revenue at a rate of 70% or more per year, Shopify is still seeing solid growth. Total revenue increased 16% year on year in the second quarter, representing a compound growth rate of 53% over the previous three years.

Shopify’s business was designed to serve online merchants, but it is now facing a new challenge. E-commerce growth has reverted to pre-pandemic levels, forcing Shopify to offer point-of-sale solutions for physical stores in order to maintain growth, but Shopify has not faltered. In the second quarter, offline gross merchandise volume increased by 47% year on year.

The offline expansion indicates that Wall Street underestimates Shopify’s competitive position. The stock is trading at a reasonable price for a leading e-commerce enabler whose brand translates well from online to in-store shopping.

Etsy

Etsy’s business differs slightly from that of its competitors in that the company’s platform focuses primarily on vintage and handmade goods. On the one hand, this can be viewed negatively because the pool of items sold on the platform is much smaller than it would otherwise be, because only a certain number of items are handmade.

However, Etsy’s focus on this specific niche is a strength. The company has established itself as the go-to platform for buyers and sellers in this category, resulting in a network effect among those interested in handmade items.

Etsy has struggled this year, as revenue growth rates have slowed — a familiar story on Wall Street with companies that thrived during the pandemic’s early days. The good news is that Etsy still has a lot of room to grow in its target market. The company estimates a total addressable market of $2 trillion, with a meagre 2.6% market share.

Etsy is not the only company in this space, and it will not be the only one profiting from this large and expanding market. It is, however, one of the most important players in it, and thanks to the competitive advantage it has developed, it is well positioned to make steady progress, as its revenue and earnings grow. Etsy’s stock price will rise in tandem.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Stephanie Bedard-Chateauneuf has positions in Amazon and Walmart Inc. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool has positions in and recommends Shopify. The Motley Fool recommends Amazon, Etsy, and Walmart Inc. The Motley Fool has a disclosure policy.

More on Investing

stock analysis
Investing

Buy the Dip: 2 Stocks to Buy Today and Hold for the Next 5 Years

These Canadian stocks are trading at discounted valuations, providing an opportunity for buying the dip.

Read more »

bulb idea thinking
Investing

Safety in Size? 2 of the Bluest Blue-Chip Stocks I’d Buy Now

TC Energy (TSX:TRP) and another cash cow have huge dividend yields for safe investors.

Read more »

A cannabis plant grows.
Cannabis Stocks

Can Aurora Cannabis Stock Recover in 2024?

Aurora Cannabis stock is down 99% from all-time highs but remains a high-risk bet, despite its cheap valuation.

Read more »

Question marks in a pile
Dividend Stocks

Where Will Brookfield Infrastructure Partners Stock Be in 5 Years?

Brookfield Infrastructure Partners (TSX:BIP.UN) kicked off 2024 with a bang. Where will it be in five years?

Read more »

TFSA and coins
Investing

TFSA Investors: 3 Incredible Stocks for 2024

Are you looking for stocks to buy and hold for years for your TFSA? These three stocks could deliver exceptional…

Read more »

A person looks at data on a screen
Stocks for Beginners

3 Warren Buffett Stocks to Hold Forever

Warren Buffett sold some shares in Apple (NASDAQ:AAPL), and the market had questions.

Read more »

Retirement
Dividend Stocks

Golden Years Gain: Your CPP Benefits at Age 70

CPP users delaying pension payments until 70 will receive substantial monthly income streams in the golden years.

Read more »

data analytics, chart and graph icons with female hands typing on laptop in background
Dividend Stocks

3 Dividend Stocks You Can Safely Hold for Decades

Top TSX dividend stocks are on sale.

Read more »