Thursday, December 8 2022

Ffrom January 1, 2019 to mid-November 2021, Shopify (NYSE: SHOP) stock has taken the market by storm with an 11x return thanks to its booming e-commerce business, rapid revenue growth and huge total addressable market. But like many once-hot tech stocks, Shopify is down a staggering 80% from its all-time high.

The company’s 10-to-1 stock split, which is expected to be completed on June 28, will make it easier to own the shares. However, that doesn’t change Shopify’s investment thesis as a company, which remains a compelling — albeit high-risk, high-reward — opportunity even after it’s been sold.

Although many top e-commerce stocks have fallen sharply over the past 18 months, some investors might be more interested in pick and shovel names with stable trading patterns that can survive a prolonged downturn. United Parcel Service (NYSE: UPS), Global-e online (NASDAQ: GLBE)and Zebra Technologies (NASDAQ: ZBRA) stand out as three long-term winners. Here’s why.

Image source: Getty Images.

UPS is a layup in the e-commerce space

Daniel Foelber (UPS): Companies like Shopify and Etsy are exciting and could very well outperform the entire e-commerce industry over time. But for many investors, UPS may be a better buy.

The company supports the domestic and global marine industry. Amazon can dominate e-commerce. But investments from retailers like walmart and Target over the years, taking more of their business online and using carriers like UPS. Similarly, consumer electronics companies like Apple place a lot more online orders.

Along with existing businesses making more sales online, there is also the growing shift of small businesses making their sales online. UPS is “merchant independent,” so to speak. It benefits from the general trend of increasing business-to-consumer and business-to-business shipping needs, making it a catch-all way to invest in the e-commerce industry.

Best of all, UPS has a dividend yield of 3.6% and a price-earnings ratio of 14.3, which is a good source of passive income at great value. With an impeccable management team and an incredibly efficient business model, UPS shares appeal to both income and value-oriented investors.

For retailers, this solutions company offers a world of difference

Scott Levine (Global-e Online): With fears of a global recession rattling many people’s nerves, many investors may not think now is the best time to buy an e-commerce stock. But keeping your feelings in check is one of the best strategies for successful investing. In fact, one of Warren Buffett’s most familiar wisdoms is to be greedy when others are scared, and if that’s good enough for the Oracle of Omaha, it’s good enough for me. This is why Global-e Online seems particularly attractive at the moment.

Unlike regional e-commerce focused companies like coupang and MercadoLibre, Global-e cares less about international borders. On his website, for example, he characterizes himself as helping to make “selling internationally as easy as selling domestically.” Through its industry-leading platform, Global-e helps more than 650 retailers connect with customers in the United States, Europe and Asia.

Making a $100 million investment to further cement its prowess, Global-e announced this week that it has reached an agreement with pitney-bowes to acquire Borderfree, an e-commerce solutions company that helps retailers expand into new markets by assisting with regulatory compliance and processing in more than 200 countries and territories.

Thanks to concerns of a global economic slowdown reducing customer demand for e-commerce, Global-e shares have taken a hit in 2022. Shares have fallen more than 69% year-to-date. But abandoning an investment in Global-e altogether due to near-term challenges seems reckless at best. The growth of e-commerce is not a blink of an eye, and Global-e is well positioned to take advantage of it as customers increasingly embrace online shopping.

Down over 50% in 2022, time to take a look at Zebra Technologies

Lee Samaha (Zebra Technologies): It hasn’t been an easy year for this automatic identification and data capture company. While management maintained full-year sales (adjusted net sales up 3% to 7%) in its first-quarter earnings call in April, it cut its profit margin forecast for the year. whole due to ‘increasing freight costs and premium global supply chain pressures. »

Unfortunately, there is little the company can do about rising transportation costs and component supplies (especially from Asia). That said, the problems may turn out to be temporary. Thus, investors should instead focus on the future drivers of the company’s growth potential, one of which is driven by e-commerce.

Zebra manufactures data capture equipment, such as barcode scanners, laptop computers and RFID readers. Its two main end markets are retail and e-commerce, and transportation and logistics. The trend towards omnichannel retail is a clear driver of end-use demand, as is the growing need for warehousing and logistics solutions for e-commerce fulfillment.

Simply put, there has never been a greater need to monitor and manage inventory and deliveries with precision than there is today. These trends will persist long after the supply chain issues weighing on Zebra’s earnings in 2022 have passed. There is no doubt that Zebra will also face cost pressures in the second quarter, but with the aggressive selling of action, it’s time to start looking at a longer term perspective here.

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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a board member of The Motley Fool. Daniel Foelber has positions in Walmart Inc. Lee Samaha does not have positions in any of the stocks mentioned. Scott Levine holds positions at Coupang, Inc. The Motley Fool holds positions and recommends Amazon, Apple, Coupang, Inc., Etsy, Global-e Online Ltd., MercadoLibre, Shopify, Target, and Zebra Technologies. The Motley Fool recommends the following options: Shopify January 2023 $1140 Long Calls, Apple March 2023 Long Calls $120, Shopify January 2023 Short Calls $1160, and $130 Short Calls in March 2023 on Apple. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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