Explore three under-loved e-commerce stocks that have the potential to rebound stronger in 2024. Sea Limited, JD.com, and Chewy offer compelling long-term value and are well-positioned to benefit from the growth of the e-commerce sector.
Sea Limited: A Strong Potential for Rebound in 2024
Sea Limited, a Singapore-based company, operates three successful businesses: Garena, Shopee e-commerce, and SeaMoney fintech. Despite a recent deceleration in growth, Sea’s fundamentals remain strong, positioning the company for multi-year outperformance. The Southeast Asian region offers a massive opportunity for further penetration in both gaming and online shopping as middle-class incomes rise. Garena’s popular games and Shopee’s position as a leading e-commerce destination in Southeast Asia provide Sea with ample room for expansion.
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While near-term headwinds may persist, analysts project significant earnings per share growth from 2023 to 2025. With a forward price-earnings ratio of just 15-times based on 2025 EPS, Sea Limited offers compelling long-term value.
JD.com: Capitalizing on China’s Growth Potential
JD.com, a Chinese e-commerce company, has been affected by the broader selloff across Chinese equities due to concerns over geopolitics and growth in the region. However, with shares now trading at attractive valuations of 8-times forward earnings and 0.25-times sales, JD stock presents an excellent risk/reward opportunity in the global e-commerce market.
Despite recent economic weaknesses, China’s growth still outpaces developed markets. The country’s large population, rising middle class, and increasing online retail market provide immense growth potential. As the second-largest player in China’s online retail market, JD.com is well-positioned to benefit from this growth. While sentiment remains low, proposed stimulus packages and government support could improve conditions for JD stock in the near future.
Chewy: Riding the Demographic Tailwinds
Chewy, a leading online pet retailer, has faced challenges since going public, with losses impacting its balance sheet. However, the company is capitalizing on the booming pet industry, particularly among younger consumers. Chewy’s wide assortment of pet products, customer-centric approach, and auto-ship offerings drive recurring revenue.
Despite economic uncertainties, surveys show that younger generations prefer pets over having children and are more likely to shop online. While Chewy is not yet solidly profitable, analysts expect its earnings per share to swing positively in the coming years as scale drives margins. With attractive valuations and ample room for online retail penetration in the pet industry, Chewy’s leadership position makes it an appealing stock to ride the demographic tailwinds.
Conclusion: E-Commerce Stocks with Strong Rebound Potential
The recent cooldown in the e-commerce sector should not be mistaken for a decline in its potential. As the world increasingly embraces online shopping, e-commerce stocks have strong long-term growth prospects. Sea Limited, JD.com, and Chewy are three under-loved stocks that have been unjustly punished but are ready for a rebound in 2024. Investors who recognize the sustainable trends and value in these stocks may find themselves rewarded in the coming years.