The e-commerce sector faced a slowdown after the temporary growth due to the Covid-19 pandemic ended and normal growth rates resumed. However, this doesn’t mean that the potential of this sector has been overhyped. In fact, it’s simply an adjustment to more sustainable long-term trends rather than a sign of e-commerce fading. Stocks like Shopify (NYSE: SHOP) and other under-loved e-commerce stocks are expected to rebound stronger as the recovery narrative takes hold.
Sea Limited (NYSE: SE) is considered one of the highest conviction picks due to its long-term upside potential, despite a massive selloff. The company operates three fast-growing businesses in Southeast Asia, which offers a massive runway for further penetration in gaming and online shopping. Similarly, JD.com (NASDAQ: JD) has been affected by the broader selloff across Chinese equities due to concerns over geopolitics and growth, leading to low sentiment for JD stock. However, the company still offers one of the best risk/reward setups in global e-commerce with its massive population and rising middle-class contributing to immense e-commerce growth this decade.
Chewy (NYSE: CHWY) has underperformed since going public, but the online pet retailer is likely to deliver big returns for patient investors. Analysts are forecasting strong future earnings for the company as it continues to expand its wide assortment of pet products. With the Gen Z demographic preferring pets over having children, and the younger generations more likely to shop online than older consumers, Chewy’s leadership position makes it a prime stock to ride these demographic tailwinds higher.