Invest in Canada’s Growing E-Commerce Industry for Big Returns

The market may be ready to get back into e-commerce stocks, and these three are the first that should climb.

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Canada has become one of the top tech producers over the last few years. We continue to see worldwide recognition for some of our companies, especially when it comes to the e-commerce industry.

Yet during these last few years this industry has seen both immense growth as well as immense losses. However, now might be the time to consider getting back into e-commerce stocks once more — especially while they remain so valuable.

Shopify stock

Shopify (TSX:SHOP) stock has seen quite a lot the last few years. During a growth phase that led the company towards global expansion, analysts worried how it would handle a recession or downturn. Well, that downturn has come, leading to several rounds of layoffs, the latest seeing 20% of its workforce gone in an instant.

However, this latest move also came with the promises for more focus. Shopify stock is getting back to its e-commerce roots. No more logistics and trying to be everything associated with e-commerce. Instead, it’s back to getting businesses to choose Shopify stock over other competitors.

This has led analysts to believe Shopify stock has more room to run, even after jumping 27% on earnings. It now has about $270 million in the bank from the layoffs and is on track to reaching free cash flow profitability during the fiscal year. This led several analysts to increase their price targets, with an “outperform” rating pretty much across the board.

Lightspeed stock

With investors coming back around to Shopify stock, this could prove beneficial to Lightspeed Commerce (TSX:LSPD) ahead of earnings. Lightspeed stock also saw shares drop, but this came a lot sooner. A short-seller report, the drop in tech stocks, and the decision to take on US$2 billion in acquisitions all weighed heavily on Lightspeed stock — not to mention a 10% cut in its staff back in January.

However, analysts believe Lightspeed stock has shown far more patience and responsibility when it comes to expansion. The company continues to take on a shift to find “higher-value” merchants. These are companies that offer over $500,000 in gross transaction value. This, along with the reduction of its staff, has led to more confidence in the company’s financial future.

Analysts now believe that the goal of hitting profitability by full-year 2024 looks “reasonable.” This comes as the company continues to focus on Lightspeed Retail and Lightspeed Restaurant, which continue to do quite well. Shares are down about 20% in the last year, though there was a jump of about 13% after Shopify earnings were released. Lightspeed stock earnings are due May 18.

Nuvei stock

Finally, we have Nuvei (TSX:NVEI), which could also be a growth story in 2023. Nuvei stock continues to beat out earnings estimates over and over, but a recent short-seller report sent Nuvei stock downwards. Spruce Point Capital Management, which seems to focus on these e-commerce companies, reported it was a “strong sell.” Spruce Point said in a report that “underlying economics are deteriorating.” Further that the Paya Holdings acquisition of US$1.3 billion was a poor move.

All in all, it looks that Spruce Point didn’t have a lot of proof to back up these claims. There were many questions raised but few answered. And honestly, this is exactly what happened with the Lightspeed and Shopify reports.

Therefore, investors may be primed for an opportunity for growth in the next few days. Nuvei stock is set for earnings to be released May 10. Shares are still down 6% in the last year, though they’re up 56% year to date.

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 Amy Legate-Wolfe has positions in Lightspeed Commerce and Shopify. The Motley Fool has positions in and recommends Nuvei and Shopify. The Motley Fool recommends Lightspeed Commerce. The Motley Fool has a disclosure policy.

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