3 e-commerce stocks that could benefit from changing consumer habits

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E-commerce stocks have had a relatively easy time rising this year, despite recent economic pressures that have left many consumers in a tough spot. This is partly due to the huge variety of products and prices offered by online stores, since there is no physical location to store and sell. Instead, e-commerce companies enjoy higher margins thanks to low-cost business models that follow the pattern of stocking goods and shipping them directly to customers.

Then there’s the aspect of changing consumer habits in favor of companies that offer a wide range of good deals. This is because the U.S. economy is largely driven by consumption, and Americans are notorious consumers, even when their wallets are hit by inflation and rising housing costs. As such, companies that capitalize on these consumption habits are likely to see their stocks rise even in the face of a potential economic slowdown.

PDD Holdings (PDD)

Earlier this year I warned investors about PDD Holdings (NASDAQ:PDD) and its business practices of exploiting import tax loopholes to offer extremely cheap products through its e-commerce platform, Temu. Since then, no major events have led investors to believe that the U.S. government will address PDD methods.

As a result, PDD stock has shown relatively steady performance all year, and the past week has helped it recover from its overall downtrend. With a month until its next earnings report, PDD could be a decent buy. What’s more, since Temu remains the centerpiece of many Americans’ cheap online shopping experience, there’s a good chance the next earnings report will continue to impress.

The latest development worth keeping an eye on before you buy is the current situation between Temu and sellers on the platform, who are protesting disciplinary penalties. On the one hand, Temu claims that these penalties, which total $110,000 for one seller, are the result of post-sale complaints. On the other hand, they could lead to restrictions for sellers on the platform, which could affect the variety of products on the site, allowing prices to remain low.

Etsy (ETSY)

During a journey of reflection on the entire company, Etsy (NASDAQ:ETSY) has lost nearly 33% of its stock value over the past year. As a result, the company’s shares are now trading within a dollar of their 52-week low. However, with management’s determination to return the company to its artisan roots, there is hope for the stock in the coming quarters.

Because Etsy has always been unique among e-commerce stocks. Its original business model focused on small-volume production from self-employed sellers who made their own goods. This initially helped Etsy carve out a niche in the e-commerce sector that aimed to offer shoppers a more personalized shopping experience while keeping prices fair and relative to the quality of the seller.

Now, CEO Josh Silverman says the company is back on track to reclaiming its goal of keeping commerce human with sweeping policy changes that went into effect in mid-July. Time will tell if these policy changes will change the stock, but with a price-to-earnings ratio of nearly 25x and a modest 3.01% year-over-year revenue growth in Q2 2024, Etsy stock could be a solid buy.

Amazon (AMZN)

No discussion about e-commerce stocks would be complete without mentioning them Amazon (NASDAQ:AMZNThe American e-commerce giant managed to once again dominate North America, achieving $90 billion in net sales in the second quarter (Q2) of 2024. This led to a 91% year-over-year increase in operating income, suggesting that the company is doing exceptionally well in capturing consumer spending at a time when consumers are more financially constrained than ever.

Moreover, looking specifically at net sales of products and services in Q2, the company sold $61 billion worth of goods and $86 billion worth of services, for a total of $147.9 billion in the quarter. What’s more impressive, however, is that Amazon managed to keep its operating expenses in line with those sales at $133.3 billion, for a net income of $14.6 billion in the quarter.

That’s a significant sales margin commitment that will likely keep investors positive about the company’s stock as it continues to expand its e-commerce presence around the world.

As of the date of publication, Viktor Zarev did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are the author’s own and subject to InvestorPlace.com Publication Guidelines.

On the date of publication of this article, the editor in charge did not hold (directly or indirectly) any interests in the securities referred to in this article.

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