Wayfair Soars After Earnings: Buy These E-Commerce Stocks

We have all heard about the decline of retail businesses and the rise of online consumerism for years, and as companies such as Amazon (NASDAQ:AMZN) slowly erode away brick and mortar retail locations with lower prices and less overhead, e-commerce companies become more and more profitable and important.

Traditional retail is unlikely to die out completely, but as people continue to trade in their seemingly always creaky shopping carts for the hassle-free online versions, it doesn’t hurt to know what companies have a strong hold on e-commerce already.

Over the last week, three online retailers reported strong earnings. All three are now displaying strong Zacks Ranks. We’ve highlighted these three e-commerce stocks to buy below:

1. Wayfair (NYSE:W)

Wayfair is an e-commerce giant that operates almost exclusively in the home goods space. Founded in 2002 as multiple e-commerce websites, the company came together as Wayfair.com in 2011. By 2015, the company posted $2.25 billion in net revenues. Wayfair currently offers over 8 million products from more than 10,000 suppliers.

The furnishings and décor giant posted strong first quarter earnings on Tuesday morning, which has sent its shares skyrocketing. Wayfair posted a loss of $0.66 per share, beating the Zacks Consensus Estimate of a loss of $0.80 per share. The company saw revenue figures of $961 million, topping our consensus estimate of $939 million.

Wayfair’s revenue was up 29% year-over-year and its active direct retail customers rose 46% sequentially. Wayfair Inc. (W) is a Zacks Rank #2 (Buy) with EPS growth projections of 27.24% over the next three to five years. The online furniture giant’s stock soared 19.95% in morning trading on Tuesday, hitting an all-time high of $61.33 per share.

2. MercadoLibre (NASDAQ:MELI)

MercadoLibre.com is an Argentina-based online marketplace that sells goods throughout Latin America. EBay Inc. (NASDAQ:EBAY) purchased a 19% stake in the company in 2001, and over the course of the next 15 years, the e-commerce giant shared its best practices with MercadoLibre as part of the partnership. MercadoLibre is now the largest e-commerce company in Latin America, selling everything from cars to electronics. Ebay sold its majority stake in the company in 2016, but the company now boasts a market cap of $12.48 billion.

Mercadolibre, Inc. (MELI) is a Zacks Rank #1 (Strong Buy) with EPS growth projections of 26% over the next three to five years. The e-commerce company’s stock has soared since January 1, when it was trading at $185 per share. Today, Mercadolibre is trading at $282.67.

In MercadoLibre’s first quarter earnings report last week, the company beat both earnings and revenue estimates by a wide margin. Mercadolibre posted earnings of $1.10 per share, beating Zacks Consensus Estimate of $0.78. The company reported revenues of $274 million, coming in above our estimate of $243 million.

3. Stamps.com (NASDAQ:STMP)

Stamps.com offers people the ability to print postage on labels, envelopes or paper from their homes or offices and mail them anywhere they wish. Stamps.com’s business model hasn’t changed much since its founding in the late 1990s, but today the online stamp seller has more small and medium-sized business customers flocking to its website.

Stamps.com’s famous radio ads—which ask us all if we are “tired of waiting in line at the post office”—might be working as the company’s total revenue jumped 28% year-over-year, due in large part to a 30% rise in mailing and shipping revenue. The company posted earnings of $1.20 per share, beating Zacks Consensus Estimate of $1.04. Stamps.com reported revenues of $105 million, topping our estimate of $94 million.

Stamps.Com Inc. (STMP) is a Zacks Rank #1 (Strong Buy), with EPS growth projections of 20% over the next three to five years. The online stamp seller’s stock had been down in the first quarter, but its stock has turned around since reporting earnings last week. Stamps.Com’s stock was up 2.71% to $106.20 per share in morning trading on Tuesday.

Bottom Line

E-commerce companies have performed well in recent years. These three online retailers reported strong first quarter earnings and seem poised for more success going forward. If you’re looking to add e-commerce stocks to your portfolio, this list is could be a solid place to start.

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