Online activities have steadily been increasing over the years as more people have access to smartphones and the internet.
Investors who wish to ride on this trend can look at promising e-commerce companies to invest in.
The explosion in online access, aided by the onset of the pandemic, has made the e-commerce sector an enticing one for growth investors.
Here are five e-commerce stocks you can consider adding to your buy watchlist that display encouraging growth prospects.
PDD Holdings (NASDAQ: PDD)
PDD Holdings is a Chinese commerce group that owns and operates a multitude of businesses.
The group has built up its sourcing, logistics, and fulfilment capabilities to support its underlying e-commerce business.
For the first nine months of 2024 (9M 2024), revenue surged 78.4% year on year to RMB 283.2 billion.
Operating profit soared 128.1% year on year to RMB 82.8 billion while net profit leapt 131.3% year on year to RMB 85 billion.
The e-commerce outfit also generated operating cash flow of RMB 92.4 billion, 61.3% higher than the RMB 57.3 billion churned out a year ago.
Co-CEO Zhao Jiazhen remarked that PDD stepped up its investments in its platform ecosystem through merchant support policies.
By onboarding high-quality merchants with attractive product and service offerings, PDD can trigger a virtuous cycle where such merchants attract more customers which in turn creates a positive feedback loop.
Amazon (NASDAQ: AMZN)
Amazon is an e-commerce player that also has businesses in cloud computing, online advertising, and digital streaming.
The e-commerce behemoth reported a commendable set of earnings for 9M 2024.
Revenue rose 11.2% year on year to US$450.2 billion.
Operating profit doubled year on year to US$47.4 billion while net profit soared 98.2% year on year to US$39.2 billion.
Free cash flow for 9M 2024 stood at US$15.1 billion, more than triple the US$4.3 billion generated in the previous year.
Amazon expanded its selection of brands offered to include AllSaints, Estee Lauder (NYSE: EL), Kate Spade, and more.
The platform also launched generative AI features such as Rufus, an expert shopping assistant, and Project Amelia, an AI assistant for sellers that helps to offer tailored business insights that help boost productivity.
Amazon announced investments in its Delivery Service Partner programme of US$2.1 billion to support safety programmes, training, incentives, and more.
MercadoLibre (NASDAQ: MELI)
MercadoLibre is the largest e-commerce and financial technology (fintech) ecosystem in Latin America.
The company offers a comprehensive suite of technology solutions on its platform that allows users access to e-commerce and digital financial services.
Mercadolibre reported a mixed set of results for 9M 2024 with total revenue rising 37.6% year on year to US$14.7 billion.
Operating profit, however, dipped by 3.3% year on year to US$1.8 billion because of a surge in provision for doubtful debts.
Net profit climbed 54% year on year to US$1.3 billion, largely due to lower foreign currency losses and lower tax expenses.
The e-commerce outfit generated a positive free cash flow of US$4.4 billion, up 54% year on year.
The fintech continued to see encouraging operating numbers for its platform for 9M 2024.
Fintech monthly active users rose from 42 million to 56 million with unique active buyers increasing from 50 million to 61 million.
Gross merchandise value increased by 13.6% year on year to US$12.9 billion while total payments volume climbed 34% year on year to US$50.7 billion.
Coupang (NYSE: CPNG)
Coupang provides retail, restaurant delivery, video streaming and fintech services to its customers.
The e-commerce player reported a mixed set of earnings for 9M 2024.
Revenue improved by 25.1% year on year to US$22.3 billion but operating profit plunged nearly 64% year on year to US$124 million.
The reason for the drop was because of higher cost of sales and higher operating expenses.
Net loss came in at US$2 million for 9M 2024 due to higher interest and tax expenses.
Despite this performance, Coupang continued to generate a positive free cash flow of US$545 million.
Coupang saw its product commerce active customers rose 11% year on year to 22.5 million.
Net revenue per customer also inched up 4% year on year to US$307.
JD.com Inc (NASDAQ: JD)
JD.com is an e-commerce technology and service provider that offers its retail-as-a-service offering to help drive productivity and innovation across a wide range of industries.
For 9M 2024, JD.com saw its revenue edge up 4.3% year on year to RMB 811.8 billion.
Operating profit climbed 26% year on year to RMB 30.2 billion with net profit surging 51.6% year on year to US$31.5 billion.
The online retailer generated a positive free cash flow of RMB 20.3 billion.
During the third quarter (3Q 2024), JD.com expanded into the apparel and accessories business to become a premier destination for stylish fashion items.
The retailer increased its product selection to boost the growth of its local and international brands.
JD.com’s supermarket division, JD Super, further boosted the core competencies of partnered brands to help support them to achieve high-quality and sustainable growth on JD.com’s platform.
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Disclosure: Royston Yang does not own shares in any of the companies mentioned.
