There was a ton of negative chatter when the Black Friday and Cyber Monday results were flat year over year, after years of continued online shopping growth. The reality is that e-commerce is bigger than ever, and the leaders in the industry continue to dominate. The difference this year was the massive supply chain issues, a problem that was documented by literally hundreds of ships lined up in the Pacific ocean waiting to dock at the port of Los Angeles.
As a result, many online and brick-and-mortar retailers started promotions earlier than usual, and many consumers ordered earlier, fearing that waiting until the traditional shopping promotion days of Black Friday and Cyber Monday would be too late and they wouldn’t receive their orders in time.
Jefferies points out that online sales grew 10% from the beginning of November through Cyber Monday. Physical retail stores grew 46% year over year on Black Friday, but they were still down 5% compared to 2019 as consumers have permanently shifted consumption online. 2020 was an anomaly to some degree due to COVID-19 restrictions in place at that time.
The analysts at Jefferies said this when discussing the increasing and changing online shopping trends:
Increased adoption of mobile commerce, curbside pickup, and buy-now-pay-later (BNPL) show changing shopping behavior: Smartphone purchases accounted for 44% of all online sales on Black Friday according to Salesforce, which is up 11% from last year. During the weekend, curbside pickup was up 33% from pre-pandemic levels and was used in 18% of online orders (for retailers who offer the service), which is actually down from 25% of all orders at the same point last year. BNPL increased 141% year-over-year on Black Friday.
Four companies dominate the cyber sales world, and all remain top picks for aggressive investors looking for long-term growth ideas. Their stocks are rated Buy across Wall Street, but it is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
Amazon
This is the absolute leader in online shopping and is on the BofA Securities US 1 list of top stock picks. Amazon.com Inc. (NASDAQ: AMZN) serves consumers through retail websites that primarily include merchandise and content purchased for resale from vendors and those offered by third-party sellers.
The company serves developers and enterprises through Amazon Web Services (AWS), which provides computing, storage, database, analytics, applications and deployment services that virtually enable various businesses. AWS is also the undisputed leader in the cloud now, and many top analysts see the company expanding and moving up the enterprise information value chain and targeting a larger total addressable market.
Like every year, online sales should continue to grow. Amazon remains the go-to portal for shoppers looking for bargains, as well as a good way for consumers to stay out of brick-and-mortar stores this year if they feel the need to.
BofA Securities has a $4,250 price objective for Amazon.com stock. The consensus target is $4,033.86, and Wednesday’s last trade came in at $3443.72.
eBay
This visionary Silicon Valley leader offers an inspiring entry point for investors. eBay Inc. (NASDAQ: EBAY) operates marketplace platforms that connect buyers and sellers worldwide. Its Marketplace platform includes its online marketplace at ebay.com and the eBay suite of mobile apps.
eBay’s platforms enable users to list, buy, sell and pay for items through various online, mobile and offline channels that include retailers, distributors, liquidators, import and export companies, auctioneers, catalog and mail-order companies, classifieds, directories, search engines, commerce participants, shopping channels and networks. Also, eBay has a strategic partnership with Bidadoo to transform the heavy equipment industry.
Stifel’s $80 price target compares with the $77.76 consensus target on eBay stock and Wednesday’s closing print of $66.81.
Etsy
This company has continued to show incredible growth. Etsy Inc. (NASDAQ: ETSY) operates two-sided online marketplaces that connect buyers and sellers, primarily in North America, Europe and India. Its online marketplaces include Etsy.com and Reverb.com.
The company offers approximately 85 million items in its various retail categories to buyers. It also provides various seller services, including Etsy Payments, a payment processing service; Etsy Ads, an advertising platform; and Etsy Shipping Labels, which allows sellers in the United States, Canada, the United Kingdom, and Australia to purchase discounted shipping labels.
In addition, the company offers various seller tools, including Shop Manager dashboard, a centralized hub for Etsy sellers to track orders, manage inventory, view metrics and statistics and have conversations with their customers; Targeted Offers, a sales, promotion and social media tool; educational resources, such as blog posts and video tutorials; Etsy Seller Handbook; and Etsy Teams, a platform to build personal relationships with other Etsy sellers.
The $325 Needham price target is a Wall Street high. The consensus target is $265.52, and Etsy stock closed at $259.28, after retreating almost 6% on Wednesday.
Shopify
After being on fire most of 2021, the shares were hit hard in November and offer a very good entry point. Shopify Inc. (NYSE: SHOP) provides a commerce platform and services in Canada, the United States, the United Kingdom, Australia, Latin America and elsewhere.
The company’s platform provides merchants to run their business in various sales channels, including web and mobile storefronts, physical retail locations, pop-up shops, social media storefronts, native mobile apps, buy buttons and marketplaces. It enables them to manage products and inventory, process orders and payments, fulfill and ship orders, build customer relationships, source products, leverage analytics and reporting, and access financing. It also sells custom themes and apps, as well as registration of domain names.
Rosenblatt’s Shopify stock price target is $2,000. The consensus target is $2,105.85. Tuesday’s closing share price was $1,459.71.
Online shopping has become easier and safer. Most importantly, it has a growing millennial and Gen Z demographic that have always shopped online, and those trends are growing as their purchasing power grows. These four companies will continue to dominate the field, and they make sense for growth stock investors with a longer time frame and a somewhat higher risk tolerance.
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