These Two E-Commerce Stocks Should Be the Foundation of Your Portfolio

On the back of the vast delivery infrastructure created by Amazon, e-commerce is thriving like never before. This is a boon for the entire e-commerce ecosystem. Not only e-stores but software facilitators like Shopify, which has surged by 150% this year alone. Here, we take a closer look at two e-commerce stocks with high potential.

Top E-Commerce Stocks in August 2020

For better or worse, Amazon’s rise as the global distributor of goods is unstoppable. Heavily boosted by the US government via frequent tax breaks and indirect subsidies, a third of all online sales go to Amazon’s deep pockets.

The coronavirus pandemic only served to cement Amazon’s status, as you can see from its rise from the pandemic’s peak in March.

Within this growing ecosystem, ProShares Online Retail ETF (NASDAQ: ONLN), consisting of 26 e-commerce companies, has surged from $28.99 on March 16 to $68.09 on August 19 this year. Two notable e-commerce stocks are rising in this wake: Chinese Baozun and Brazilian StoneCo.

Baozun (NASDAQ:BZUN)

China, with its state-run capitalism, has made consistent efforts to mirror Western infrastructure in all aspects. Accordingly, we can view Baozun as a mirror of the Canadian Shopify. The key difference being that Baozun is in charge of facilitating Western companies that wish to tap into the Chinese huge online retail market.

NY-based Coach, Adidas, Calvin Klein, Zara, Adobe, Nike, GoPro, Microsoft are just some of the Western companies serviced by Baozun. In this year’s China Annual Digital Advertising Award, Baozun managed to snag five awards.

Baozun’s revenue is generated by subscriptions and sales cuts. Its room for growth is substantial. China’s online retail market rose 27% last year, constituting 55% of the world’s e-commerce traffic. Baozun’s recent awards suggest that it has been selected as a purveyor of e-commerce for Chinese enterprises as well. Standing at the current $2.7 billion valuation, this makes it cheaply valued and highly appealing amid China’s rapid coronavirus recovery.

StoneCo (NASDAQ:STNE)

Moving away from China into Brazil, StoneCo doesn’t mirror Shopify or Amazon but focuses on boosting businesses to succeed in the stiff online retail competition. As one of Warren Buffet’s top picks, StoneCo offers a variety of services designed to help its partners. They include online payments infrastructure, tools for sales conversion, and small business financing,

Notably, this month, StoneCo made a $1.1 billion deal to acquire Linx, a Brazilian version of Spotify that provides online e-commerce presence for both online and brick-and-mortar stores. As Latin America’s largest nation, Brazil is poised to be the speartip of e-commerce.

Naturally, the new coronavirus mindset will greatly facilitate this spread, both in terms of online payments and online shopping. With a strong market capitalization of about $13.75 billion, StoneCo stands to shape Latin America’s e-commerce ecosystem for years to come.

Had it occurred to you to invest in Amazon at the peak of coronavirus pandemic? What other types of stocks do you view as natural safeguards of investments? Let us know in the comments below.

Disclosure: Tim Fries has no positions in any of the stocks mentioned, and has no plans to initiate any positions within the 72 hours following the publishing of this article. This article expresses the opinions of Tim Fries. Tokenist Media LLC has no position in any of the stocks mentioned, and does not plan to initiate any positions within 72 hours of the publishing of this article. Please consult our website policy for more information.