eCommerce Industry on Steroids: 3 Stocks to Cash In

Industry Overview - The e-commerce industry is expected to perform well in 2024, with e-commerce sales in Q3 2024 growing by 7.4% compared to Q3 2023, while total retail sales increased by 2.1% [1] - E-commerce accounted for approximately 16.2% of total U.S. retail sales, with Q4 typically being the strongest quarter for the industry [2] - The convenience of online shopping is a primary driver of e-commerce growth, particularly among Gen-Z consumers who are accustomed to high levels of digitization [3][4] Current Trends - The 2024 holiday sales season has shown strong performance, with consumers spending 8.4% more than the previous year, driven by steep discounts and increased mobile shopping [5] - Mobile shopping accounted for 54.5% of total shopping, with AI influencing 19% of orders during the holiday season [6] - The total retail experience is increasingly blending online and offline activities, with consumers preferring faster delivery and pickup options [10] Market Performance - The Zacks Internet - Commerce industry ranks 70, placing it in the top 28% of 250 Zacks industries, indicating positive near-term prospects [11] - The industry has collectively gained 43.5% over the past year, outperforming the broader Zacks Retail and Wholesale Sector and the S&P 500 [16] Valuation Insights - The industry currently trades at a price-to-earnings (P/E) ratio of 26.6X, representing a premium to both the S&P 500 and the broader retail sector [18] - Despite the positive growth trends, the industry is considered overvalued compared to its historical median P/E level [18] Stock Recommendations - ACV Auctions Inc. (ACVA): Expected to see significant growth with analyst estimates projecting 160% growth in 2024 and 517% in 2025, driven by a 32% revenue growth in 2024 [22][23][24] - Amazon, Inc. (AMZN): Anticipated to achieve 10.9% revenue growth and 82.4% earnings growth in 2024, supported by its Prime loyalty program and AWS [26][28] - JD.com, Inc. (JD): Projected earnings growth of 31.7% in 2024, benefiting from improved consumer sentiment and strong performance in general merchandise [30][32]