4 Solid stocks to buy

The pandemic forced millions of people to shop from home, resulting in a boom in e-commerce. Since then, e-commerce has become the most preferred way for people to shop as they have realized the convenience and security of online shopping. Thanks to this, e-commerce has developed dynamically over the last few years.

E-commerce played a major role in helping the retail sector weather the pandemic and has since fueled sales amid challenges from soaring commodity prices. Given this scenario, stocks of companies with a strong online presence, e.g Dollar General Corporation Directorate General, Sportsman’s Warehouse Holdings, Inc. SPWH, Computer Connection, Inc. CNXN i Arhaus limited liability company ARHS is expected to benefit in the near term.

E-commerce sales continue to grow

According to the Department of Commerce, e-commerce sales in the United States topped $1 trillion for the first time, reaching $1.02 trillion over the past 12 months. This is despite rising commodity prices. Online sales are likely to grow by single digits this year for the first time since 2009.

Online sales growth is forecast to reach 9% in 2022 as inflationary pressures continue to impact the retail sector. Even then, the retail sector was doing quite well and sales continued to grow. E-commerce has played a key role in this.

The third quarter was relatively better for the retail sector. According to the Census Bureau, total retail sales for the quarter were $1,792 billion, up 0.7% from the previous quarter. Online sales increased 3% month-over-month and 10.8% year-over-year to $265.9 billion. E-commerce accounted for 14.8% of total retail sales in the third quarter.

Although online retail sales are expected to grow by single digits this year, the expansion of e-commerce has been tremendous since the outbreak of Covid-19. E-commerce has been around for a long time, but the pandemic gave it a huge boost as millions of people shopped at home for fear of contracting the virus and tried to maintain social distancing.

Although people have started visiting brick-and-mortar stores as the economy reopens, e-commerce still dominates. In fact, e-commerce spending was previously predicted to reach $1 trillion in 2024, but this goal was already achieved this year, confirming its enormous potential.

Needless to say, the market has doubled in size in just three years. Spending on e-commerce is 25% higher than before the pandemic. If the pandemic had not occurred and the market had been growing at a rate of 14-15%, as it had been doing for years, total sales would have been about $815 billion, down by about $200 billion.

Our choices

Given this scenario, it would be wise to invest in these four companies with a strong online presence. Each stock carries a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see complete list of today’s Zacks #1 ranked stocks here.

Dollar General Corporation is one of the largest discount chains in the United States. DG trades goods at cheap prices, usually $10 or less. Dollar General offers a wider selection of merchandise, including consumables, seasonal items, home products and clothing.

Dollar General’s expected earnings growth rate for the current year is 13.8%. DG stock has gained 7.7% in the last 30 days. Dollar General Home currently has a Zacks Rank of #2.

Sportsman’s Warehouse Holdings, Inc. is an outdoor sporting goods retailer. Its stores offer camping, fishing, hunting and shooting products. SPWH stores also offer clothing, footwear, optics, electronics and accessories.

Sportsman’s Warehouse’s expected earnings growth rate next year is 25.2%. The Zacks Consensus Estimate for current-year earnings has improved 3.6% over the past 60 days. SPWH is currently sporting a Zacks Rank of #1.

Vivint Smart Home, Inc. is a smart home company operating primarily in North America. VVNT delivers an integrated smart home system with in-home consultations, professional installation and support provided by smart home specialists, as well as 24/7 customer care and monitoring.

Vivint Smart Home’s expected earnings growth rate for the current year is 70.2%. VVNT stock has gained 23.6% in the last 30 days. VVNT is currently sporting a Zacks Rank #2.

Arhaus limited liability company is a lifestyle brand and multi-channel retailer of high-quality home furnishings. ARHS offers a range of traditional quality products.

Arhaus’s expected earnings growth rate for the current year is 21.7%. The Zacks Consensus Estimate for current-year earnings has improved 15.1% over the past 60 days. ARHS currently has a Zacks Rank #2.

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