Top 3 E-Commerce Stocks With a Huge Growth Runway

E-commerce is a rapidly growing industry, especially in emerging markets

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Apr 11, 2022
  • Global e-commerce sales are forecasted to be $5.5 trillion in 2022, representing 21% growth year-over-year.
  • China makes up 52% of the global e-commerce market share, and emerging markets have plenty of growth runway ahead.
  • Here are my top 3 e-commerce picks.
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Global e-commerce, already on a high-growth path, saw sales growth accelerate faster than expected in 2020 due to the pandemic, jumping by 25.7% according to data from eMarketer. As of 2022, around 21% of all retail sales are completed online, and this is expected to increase to 24.5% by 2025.


Source: eMarketer

China makes up 52% of this global e-ccommerce market share, making it a compelling opportunity for investing in this industry. Meanwhile, emerging markets such as Latin America are also seeing huge growth. Here are my top three e-commerce stocks which I believe are poised to benefit the most from these tailwinds.

1. Alibaba

Alibaba (

BABA, Financial), is the leading Chinese e-commerce and cloud computing giant which has been dubbed the “Amazon (AMZN, Financial) of China.” The firm has had a series of regulatory headwinds which caused the stock price to decline substantially. However, recently the share price has started to bounce back, up 25% after China's state media released a positive statement regarding the tech crackdown.


Alibaba has been growing revenues at a meteoric 42% compound annual growth rate (CAGR) over the past three years. In the fourth quarter of 2021, revenue was $38 billion, an increase of 10% year over year, which was driven by:

  • China commerce segment revenue +7% year-over-year to $27 billion.
  • Cloud segment +20% year-over-year to $3 billion.
  • International commerce segment +18% year-over-year to $2.5 billion.
  • Local consumer services segment +27% year-over-year to $1.9 billion


Alibaba’s operating income did take a major hit in the fourth quarter with a reported decrease of 86%. This is mostly from temporary issues such as a $3.9 billion impairment of goodwill related to the digital media and entertainment segment and increasing investments.

According the GF Value line, a unique intrinsic value estimate from GuruFocus, the stock is significantly undervalued.


3. MercadoLibre

MercadoLibre (

MELI, Financial) has been dubbed the "Amazon of Latin America." The company is the market leader in three main Latin American markets: Brazil, where they have 27% market share; Argentina, with a 68% market share; and Mexico, with 13.6%. E-commerce penetration is still low in South America at just 4.9% compared to 13% in the U.S. This means companies in this sector have plenty of growth runway ahead. MercadoLibre grew revenues by a gigantic 77% in 2021 to $7 billion, while profits soared up 244% to $441 million.


The GF Value line gives the stock a rating of significantly undervalued:


3. Sea Ltd

Sea Ltd (

SE, Financial) has been called a “three-headed monster" by analysts, as it has three powerful core businesses: Garena (gaming), Shopee( e-commerce) and Seamoney (fintech). Sea's stock sold off hugely and has now cratered down 67% from its highs in November 2021.


However, in 2021, revenue was $10 billion, which was an increase of a meteoric 128% year-over-year, while gross profit was up 189% in 2021 to $3.9 billion.


According the the GF Value line, the stock is significantly undervalued:


Final thoughts

E-commerce is a rapidly growing market with a large total addressable market available. Emerging markets such as Southeast Asia and Latin America have relatively low e-commerce penetration compared to the U.S. and Europe, and thus these offer the most growth runway ahead. I also like Alibaba because of the potential to benefit from mispricing due to regulatory headwinds. I believe all three of these stocks could be great plays for the long term.


I am/ we are currently short the stocks mentioned. Click for the complete disclosure
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