Canadian investors looking for wealth growth can invest in several TSX stocks offering the potential to deliver outsized returns. With the growing popularity of online shopping fueled by tech sector stocks, the global e-commerce industry is gaining significant momentum. While online sales still account for less than a fifth of all retail sales, the trend is becoming increasingly popular.
For e-commerce stocks operating in this space, there is plenty of room to grow. Stock market investors with shares in such companies and, in turn, stand to make a lot of money in the long run. As the global e-commerce market is forecast to surpass US$7 trillion in the coming years, here are three stocks you can own to ride the e-commerce wave.
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Shopify
Shopify (TSX: SHOP) is a $109.36 billion market capitalization Canadian multinational e-commerce company headquartered in Ottawa. The e-commerce giant offers a portfolio of tools and tech-based solutions to merchants worldwide, helping them set up their online presence. From online payments to digital marketing services, the tech giant provides several tools to empower merchants.
Rising interest rates and inflation have become major headwinds for the tech stock, causing a significant downturn in its share prices. As of this writing, Shopify stock trades for $85.62 per share, down by almost 60% from its November 2021 all-time high. That said, it has an almost 30% market share in the U.S., making it the second-largest company in the space after Amazon.
As it continues onboarding more merchants, its financials are increasingly likely to improve in the coming years. At current levels, it has a long way to go before it recovers to its all-time highs and exceeds those figures.
Gildan Activewear
Gildan Activewear (TSX: GIL) is an American-owned Canadian clothing manufacturer. The $7.61 billion market capitalization company headquartered in Montreal is a vertically integrated apparel manufacturer. Selling goods to distributors and retailers across Europe, Asia-Pacific, and the Americas, it uses its own retail network, third-party sellers, and a successful e-commerce platform.
Despite a year-over-year 9% drop in its first-quarter sales for fiscal 2023, Gildan Activewear’s management feels confident that the company will report record revenue for this fiscal year. That said, Gildan Activewear stock trades for $42.71 per share at writing, down by over 20% from its all-time high.
The earnings report might have harmed investor sentiment about Gildan Activewear stock. However, management remains confident that the best the company has to offer is yet to come.
Aritzia
Aritzia (TSX: ATZ) is a $4.06 billion market capitalization women’s fashion brand headquartered in Vancouver. As an integrated design house of exclusive fashion brands, it offers a wide variety of apparel to customers in Canada and the United States. Generating substantial revenue through its retail operations, it has a growing e-commerce segment as well.
The high-end vertically integrated design house continues to spend money on its organic growth, spending over $38 billion in capital expenses in the fourth quarter of 2023 and opening eight new boutiques over the last four quarters. As of this writing, Aritzia stock trades for $36.78 per share, down by 38.44% from its January 2022 all-time highs.
While the sale of discretionary goods takes a hit during turbulent market environments, Aritzia stock could see a major boom in sales as the economy recovers.
Foolish takeaway
While there is no doubt that the e-commerce industry will only grow in the coming decade, investing in these stocks does not come without its risks. Due to macroeconomic factors, even the best e-commerce stocks can experience short-term volatility. If you have the risk tolerance to bear near-term volatility, these three stocks can be excellent assets to consider for your portfolio.
While Shopify stock has the riskiest profile of these three TSX stocks, it is the stock I’d own for outsized, long-term capital gains potential.
