A Wall Street analyst breaks down why e-commerce stocks are 'just getting started' and will continue to see massive growth even after vaccine distribution — and says these 4 are best-positioned for gains during the holiday shopping season

  • This year has provided the perfect storm for e-commerce stocks, with much of the world directed to stay at home for long stretches. 
  • But with a vaccine on the way, they could face headwinds.
  • Global X's Pedro Palandrani told us why he thinks e-commerce stocks will continue to see growth after the vaccine, and highlighted four stocks set to benefit from holiday shopping.
  • Visit Business Insider's homepage for more stories.

This year has provided the perfect storm for e-commerce stocks, with much of the world directed to stay at home for long stretches. 

On Black Friday, for example, online sales hit a record $9 billion, a 22% jump from 2019.

But with a vaccine on the way, e-commerce companies could face headwinds.

Opinions vary on how much consumer habits will revert to pre-pandemic ways.

There are those like Morgan Stanley's Andrew Sheets, who told Business Insider in an October 27 interview that people will be surprised by the level of normalcy we return to, and stocks that are lockdown beneficiaries will face demand difficulty in the near term because of this.

"A vaccine makes people start to think: 'You know what? The second half of 2021, 2022, those could look more normal, and if the economy is looking more normal, do I really want to pay up so much for companies that benefit with abnormal?'" Sheets said.

And there are those like growth investor Nancy Zevenbergen who think society will continue forging ahead from where the pandemic has brought us in terms of digitization. Telemedicine, for example, is here to stay, she told Business Insider in October.

"Telemedicine was being pushed because of lowering costs for large employers. But then COVID hit and it wasn't an option, it was the only way you really could," Zevenbergen said. "So do I see that continuing to grow, or do I think that will roll back when COVID goes away? I don't think we're ever going back the other way."

For Pedro Palandrani, a research analyst at Global X, things will not be going back to the way they were once the vaccine is widely distributed, at least when it comes to e-commerce. 

He said that the market's expansion during the pandemic will allow it to continue to grow.

"It's not something that should negatively impact e-commerce," Palandrani said in a December 3 interview with Business Insider.

"Clearly, e-commerce kind of became the de facto shopping solution for many consumers during the pandemic, but what we actually saw is the coronavirus expanded the total addressable market for e-commerce. And that means that those not used to buying goods and products online before the pandemic, now they're doing that," he added.

He cited older generations, who were most impacted by COVID-19, starting to engage in the e-commerce economy. 

Palandrani also said the US e-commerce market as a whole is underdeveloped compared to countries like China. While market penetration is about 14-15% in the US, it's at around 25% in China.

"The fact is that we believe e-commerce is just getting started. E-commerce penetration is still relatively low," he said.

He continued: "We just need to look at Singles Day and the $74 billion that Alibaba saw during their massive online shopping event, and compare that to Amazon's Global Prime Day that only reached one-seventh, or $10 billion, of Alibaba's. 

4 stocks set to benefit from holiday shopping

Palandrani also pointed to four e-commerce stocks he believes will receive a boost from holiday shopping in December.

One is Shopify (SHOP), a Canadian company that allows businesses to digitize sales.

"A great example of why we believe this trend will continue in e-commerce is Shopify," Palandrani said, citing Shopify's growing number of merchants. "Many investors were expecting Shopify to be negatively impacted amid the pandemic because small- and medium-size businesses tend to suffer the most during recessions. That wasn't the case this time around."

Others include online furniture vendors Wayfair (W) and Overstock.com (OSTK).

"Especially around the holiday season and during the next few quarters, I really like what we're seeing from stocks like Wayfair and Overstock.com," Palandrani said.

He added: "The US furniture industry here is a $150 billion market. So it's a very massive opportunity — when you look at stocks like Overstock.com, they have less than $3 billion in market cap, so I think the opportunity there to continue to penetrate the US furniture market is quite sizeable."

Finally, he highlighted Etsy (ETSY), an online handmade goods retailer.

"We saw some of the positive results Etsy had in Q3: their gross merchandise volume increased by 116%, clearly showing the strength of e-commerce and how well Etsy is doing during this time," he said. "So we would expect these companies to continue to thrive amid the holiday season." 

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