December 5, 2022

Shopify had a blowout fourth quarter, with sales rising 41% from a year earlier, the company reported Wednesday.

Sales are the main objective of a company working at the forefront of the shift to ecommerce. But Shopify’s stock fell as much 16% on Feb. 16, even after company reported results that came in ahead of analysts’ expectations for revenue and earnings.

Read: Shopify sees a sales slowdown in the first half of 2022.

The above headline from Barron’s spells out the problem in this market environment for any highly valued tech stock: Even in a growing economy with better-than-expected retail sales, if a company’s own sales outlook for the months ahead disappoint investors, the stock can crash.

While we cannot predict which highly valued ecommerce companies might be next to disappoint investors, we can look ahead to see which are expected to increase sales the most quickly. A list of these expected rapid-growers derived from the holdings of three ecommerce exchange-traded funds is below.

A high valuation in a touchy market

Here’s a three-year price chart for Shopify Inc.
SHOP
through the close on Feb. 15 — that is, before the company announced its fourth-quarter results:


FactSet

The stock was up fivefold for three years before Shopify put out its fourth-quarter results. And the stock was trading for 14.5 times the consensus forward sales estimate among analysts polled by FactSet. That’s a very high valuation when compared with a price/sales valuation of 2.6 for the S&P 500
SPX
and 2.9 for a venerable internet services highflyer such as Amazon.com Inc.
AMZN.

Investors were paying through the nose for Shopify’s stock. Then again, the stock had traded as high as 47.1 times the consensus forward sales estimate in July 2020.

Three ecommerce ETFs

In order to come up with a list of ecommerce stocks for a screen, we looked at three ETFs focusing on this industry group:

  • The ProShares Online Retail ETF
    ONLN
    has $581 million in assets under management and holds 39 stocks. It is heavily concentrated, with Amazon making up 25% of the portfolio and Alibaba Group Holding Ltd.
    BABA
    the second-largest holding at 13.6%. The third-largest holding is eBay Inc.
    EBAY,
    at 4.5%.

  • The Amplify Online Retail ETF
    IBUY
    has $475 million in assets, holds 79 stocks. The individual stocks are equal-weighted within the portfolio, which itself is 70% weighted to the U.S. According to FactSet, this approach “keeps giants [such as] Amazon from dominating the basket, but also introduces a bias to smaller and possibly more risky firms.”

  • The Global X E-Commerce ETF
    EBIZ
    has $151 million in assets. It holds 40 stocks and has a modified weighting by market capitalization. Its top five holdings make up 13.1% of the portfolio. Expedia Group Inc.
    EXPE
    is the largest holding, at 6.7%, followed by Booking Holdings Inc.
    BKNG
    at 6.4% and JD.com Inc.
    JD
    at 5.5%.

Leaving the ETFs in size order, here are projected compound annual growth rates (CAGR) for sales per share through 2023, based on consensus estimates among analysts polled by FactSet:

ETF

Ticker

Two-year estimated sales CAGR

Estimated revenue per share – 2021

Estimated revenue per share – 2022

Estimated revenue per share – 2023

ProShares Online Retail ETF

ONLN 7.9%

$34.50

$37.39

$40.19

Amplify Online Retail ETF

IBUY 12.3%

$49.79

$56.60

$62.74

Global X E-Commerce ETF

EBIZ 10.0%

$16.60

$18.35

$20.09

Source: FactSet

Ecommerce stock screen

Together, the three ETFs hold 78 stocks. Among those, 63 are covered by at least five analysts polled by FactSet for estimates, ratings and price targets.

Here are the 15 companies analysts expect to achieve the highest sales CAGR through calendar 2023. The consensus sales estimates are in millions of U.S. dollars.

Company

Ticker

Country

Two-year estimated sales CAGR

Estimated sales – 2021

Estimated sales – 2022

Estimated sales – 2023

Ozon Holdings PLC ADR

OZON Cyprus

59.8%

2,349

$4,017

$5,998

Global-e Online Ltd.

GLBE Israel

53.0%

$240

$367

$563

Dada Nexus Ltd. ADR

DADA-US

China

52.6%

$1,105

$1,686

$2,573

Sea Ltd. (Singapore) ADR Class A

SE Singapore

41.4%

$9,656

$14,251

$19,299

Jumia Technologies AG ADR

JMIA Germany

39.8%

$170

$227

$332

Uber Technologies Inc.

UBER U.S.

38.7%

$17,560

$27,430

$33,769

Shopify Inc. Class A

SHOP Canada

34.0%

$4,573

$6,093

$8,214

MercadoLibre Inc.

MELI-US

Uruguay

33.6%

$6,971

$9,352

$12,443

TripAdvisor Inc.

TRIP U.S.

32.5%

$909

$1,373

$1,595

Trip.com Group Ltd. ADR

TCOM China

31.2%

$3,088

$3,869

$5,319

FIGS, Inc. Class A

FIGS United States

30.9%

$419

$547

$717

Pinduoduo, Inc. Sponsored ADR Class A

PDD China

30.8%

$15,388

$20,251

$26,320

Booking Holdings Inc.

BKNG United States

30.2%

$10,838

$15,722

$18,384

Carvana Co. Class A

CVNA United States

29.6%

$12,575

$16,488

$21,134

Source: FactSet

You can click on the tickers for more about each company.

Then read Tomi Kilgore’s detailed guide to the wealth of information available for free on the MarketWatch quote page.

Leaving the list in the same order, here’s a summary of analysts’ opinions about the stocks:

Company

Ticker

Share “buy” ratings

Share neutral ratings

Share “sell” ratings

Closing price – Feb. 15

Cons. Price target

Implied 12-month upside  potential

Ozon Holdings PLC ADR

OZON-US

57%

36%

7%

$22.23

$41.41

86%

Global-e Online Ltd.

GLBE 100%

0%

0%

$39.42

$72.44

84%

Dada Nexus Ltd. ADR

DADA 92%

8%

0%

$10.85

$35.61

228%

Sea Ltd. (Singapore) ADR Class A

SE 96%

4%

0%

$149.55

$320.59

114%

Jumia Technologies AG ADR

JMIA 14%

72%

14%

$9.70

$18.88

95%

Uber Technologies Inc.

UBER 90%

10%

0%

$37.09

$62.67

69%

Shopify Inc. Class A

SHOP 51%

46%

3%

$889.50

$1,484.62

67%

MercadoLibre Inc.

MELI 83%

17%

0%

$1,170.30

$1,789.86

53%

TripAdvisor Inc.

TRIP 26%

53%

21%

$30.07

$35.80

19%

Trip.com Group Ltd. ADR

TCOM 79%

15%

6%

$30.42

$31.97

5%

FIGS Inc. Class A

FIGS 73%

27%

0%

$19.40

$36.36

87%

Pinduoduo, Inc. Sponsored ADR Class A

PDD 76%

22%

2%

$61.23

$99.21

62%

Booking Holdings Inc.

BKNG 56%

41%

3%

$2,635.16

$2,739.52

4%

Carvana Co. Class A

CVNA 60%

36%

4%

$142.50

$290.74

104%

Souce: FactSet

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https://www.marketwatch.com/story/as-investors-punish-shopify-these-15-ecommerce-stocks-are-expected-to-grow-sales-the-most-through-2023-11645035163