The stock market has certainly been on quite the rollercoaster ride over the past year, but for the most part, it’s been up and to the right for many prominent growth stocks. For companies in the e-commerce sector, it’s been a relatively solid year as well, as investors focus on companies with long-term secular growth catalysts underpinning their business models.
For investors seeking top-tier e-commerce stocks to buy, here are two companies I think investors want to keep on their radar as buying opportunities at current levels.
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Shopify
As one of the largest e-commerce companies, Shopify (TSX: SHOP) is a Canadian giant with a global brand that’s worth considering. Serving millions of users, Shopify offers a platform where companies can manage sales, market their products and services and accept payments for their online orders.
Shopify remains one of the most-searched stocks on the TSX due to its ongoing demand and share price. With a market capitalization of $128 billion, Shopify is a mega-cap tech stock known for its subscription solutions, which provide stable recurring revenue which investors clearly appreciate.
In terms of the company’s financial performance, Shopify’s revenue grew by 25% in the second quarter of 2024. The company has established network effects in its entire business model, where a particular service or product improves the more people use it. In addition, Shopify operates a merchant-friendly business model that enables merchants to dictate pricing. It allows more merchants to use the platform, enabling Shopify Inc. to enhance its global presence.
Impressively, Shopify has penetrated 15% of retail business in North America, 11% in the Asia-Pacific region (excluding China) and 10% in Europe, Africa and the Middle East. These factors showcase Shopify’s dominance in the e-commerce industry, positioning the company well for gains over the long term.
Amazon
An even more popular e-commerce company, Amazon (NASDAQ: AMZN) is a global brand with billions of customers. Since the start of 2021, the company has made direct investments in its Canadian operations, totalling more than $50 billion. Amazon’s retail revenue represents approximately 80% of its total revenue, with the vast majority of its profitability generated from its Amazon Web Services (AWS) cloud business.
As one of the biggest breakthroughs of artificial intelligence in the last few years, Amazon plans to enhance its business in this segment. In addition, Amazon Prime and Amazon Web Services enable the company towards strong customer orientation and technological leading-edge products. Moreover, Amazon has continuously demonstrated its sustainability factor, providing satisfying results and innovations to investors.
When it comes to growth initiatives, Amazon has been working on a number of unique verticals investors are clearly interested in. Indeed, this isn’t your average everyday e-commerce giant. The company is launching satellites into orbit to provide the best quality internet connection to users and is venturing into a multi-trillion-dollar healthcare business, acquiring One Medical platform and launching a subscription service for prescription medication.
Regarding net sales, Amazon witnessed a 10% increase to US$148 billion in the second quarter of 2024. The company also reported an increase in its operating income from US$7.7 billion to US$14.7 billion year over year. That’s the kind of growth stock investors want to consider in this higher-valuation environment.
