InvestorPlace – Stock Market News, Stock Advice & trading Tips
The global e-commerce landscape is experiencing a seismic shift, gradually wresting market share from traditional retail counterparts. Statista forecasts a robust 9.79% compounded annual growth rate in worldwide e-commerce revenues between 2024 and 2029, signaling the early stages of this transformative journey. As undervalued e-commerce stocks provide an enticing proposition, savvy investors are poised to benefit from this ongoing evolution.
The allure of e-commerce transcends mere convenience; it is a magnet for consumers, seamlessly blending practicality with rapid delivery. The vast array of options caters to diverse preferences, offering a superior shopping experience compared to brick-and-mortar outlets limited by space.
While certain e-commerce behemoths have garnered investor attention, overlooked gems still glitter in the stock market. By tapping into the growth potential of these hidden treasures, investors stand to reap substantial rewards. Here we explore three e-commerce stocks that are poised for rapid expansion due to their current undervaluation.
eBay (EBAY): A Phoenix Rising
Source: BigTunaOnline / Shutterstock.com
Once a trailblazer in the e-commerce realm, eBay (NASDAQ:EBAY) may have lost some of its luster, yet it remains a hidden gem in the market. The stock’s subdued performance, attributed to comparatively lower revenue growth, has led to its undervaluation.
Disregard the grim valuation metrics hinting at EBAY’s bleak prospects. Trading at a mere 10 times forward earnings with a price-to-free cash flow ratio of 13, the stock may seem unattractive. However, a closer look reveals a different narrative. In 2023, the platform reported a 4% revenue uptick on an FX-neutral basis, underscoring its resilience.
Boasting a global footprint spanning 190 countries, eBay’s scale remains unparalleled. This extensive reach enables tailored buyer experiences, a critical differentiator. Moreover, strategic initiatives aimed at revitalizing the platform are underway, geared towards reigniting growth.
By leveraging its scale, eBay is diversifying its revenue streams. The expansion of its advertising segment, currently a $1.4 billion business, along with forays into global payments, financial services, and shipping, reflects its innovative spirit. At the recent Morgan Stanley Technology, Media & Telecom Conference, eBay charted a course for positive growth in the latter half of the year, signaling a promising trajectory.
MercadoLibre (MELI): A Latin American Dynamo
Source: tiagogarciafoto / Shutterstock.com
Termed the Amazon of Latin America, MercadoLibre (NASDAQ:MELI) recently faced a dip in its stock price post-earnings, making it an opportune moment for investors to enter. The earnings stumble, attributed to a one-off $351 million charge linked to legal and tax disputes, veiled the company’s sturdy fundamentals.
MercadoLibre’s business fundamentals remain robust, serving customers across 18 countries with a user base of over 218 million in 2023. Witnessing a surge in gross merchandise volume from $34.4 billion in 2022 to $44.7 billion in 2023, the company’s growth trajectory is evident.
The stellar Q4 2023 results highlight MercadoLibre’s growth potential, with commerce revenues soaring by 48%. Key markets such as Brazil, Argentina, and Mexico witnessed substantial year-over-year growth, underscoring the company’s regional dominance. Bolstered by accelerated platform volume growth and innovative initiatives like the Meli+ loyalty program, MercadoLibre is primed for further expansion.
Alibaba (BABA): The Chinese Commerce Maestro
Source: BigTunaOnline / Shutterstock.com
Amidst the sea of undervalued e-commerce stocks, Alibaba (NYSE:BABA) shines as a beacon of opportunity. Boasting a paltry forward P/E of 9 and a cash reserve exceeding $38 per share, surmounting 50% of its share price, the stock stands as a testament to underappreciated potential.
Alibaba’s commitment to capitalizing on its discounted valuation is evident through its $25 billion bolster to its buyback program, amplifying the total buyback purse to $35 billion. This strategic move underscores management’s confidence in the company’s future prospects.
Evidence of management’s vote of confidence in BABA emerges through the recent stock purchases by cofounders Jack Ma and Joe Tsai, aggregating over $200 million. Additionally, Tsai’s return as chairman in 2023 signifies a renewed focus on Alibaba’s growth trajectory.
As the dominant e-commerce player in China through the Taobao and Tmall platforms, Alibaba is well-positioned to capitalize on the burgeoning online commerce market. Despite conceding market share to competitors like Pinduoduo, owned by PDD Holdings (NASDAQ:PDD), Alibaba’s strategic realignment efforts signal a revitalized push towards market leadership.
The proactive enhancement of customer engagement and merchant participation underscores Alibaba’s proactive stance in the evolving market landscape. Benefitting from the expanding e-commerce market share in China, the company is poised for sustained growth. Backed by the $35 billion repurchase program and long-term growth drivers, Alibaba presents a compelling investment proposition.
On the date of publication, Charles Munyi did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Charles Munyi has extensive writing experience in various industries, including personal finance, insurance, technology, wealth management and stock investing. He has written for a wide variety of financial websites including Benzinga, The Balance and Investopedia.
More From InvestorPlace
The post The 3 Most Undervalued E-Commerce Stocks to Buy in March 2024 appeared first on InvestorPlace.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
