With life confined to indoor spaces for over a year due to the COVID-19 pandemic, activities necessary to support life through making money and spending have increasingly shifted to the internet.
In short, COVID-19 gave virtual shopping a massive boost as people were prevented from going outside in the early stages of the COVID-19 outbreak and currently more out of convenience and habit.
According to Mastercard’s latest Recovery Insights report, an additional $ 900 billion was spent on online retail worldwide in 2020. Last year, e-commerce accounted for about $ 1 for every $ 5 spent on retail, up from about $ 1 for every $ 7 in 2019.
The ability to move sales online has provided a much-needed cushion to the stores of retailers, restaurants, and other businesses large and small.
According to Mastercard’s Recovery Insights: Commerce E-volution, nearly 20-30% of the COVID-induced switch to digital mode is expected to be permanent on a global scale.
The report states that the early adopters of digital forms of distribution benefit from the first mover advantage. Economies like the United States and Britain, which had decent e-commerce skills even before the pandemic broke out, have been able to sail the troubled waters much better than the latecomers like Argentina and Mexico. Asia Pacific, North America, and Europe were the strongest regions in increasing ecommerce uptake.
With purchases of essential items taking precedence over discretionary products, digital profits have proven to be stickier for grocery and discount stores. 70-80% of the grocery e-commerce surge is also expected to stay here as consumers find a new habit of conveniently shopping from home.
International e-commerce skyrocketed 25-30% year-over-year from March 2020 to February 2021 as shoppers around the world placed online orders with a much wider range of choices.
In addition, consumers around the world are increasingly searching and testing their shopping experience on a larger number of websites and online marketplaces than ever before. Residents in countries like Italy and Saudi Arabia are buying more from online stores, with an average growth rate of 33%, closely followed by Russia and the UK.
This transition to e-commerce is driving electronic payments forward. However, it is clear that online purchases are mostly made using electronic means such as net banking, mobile payment or cards, etc. In stationary retail, too, cashless payment increased by a further 2.5% above the ongoing trend, accelerating the trend from cash to electronic payments during a year, during which bans and travel embargoes were imposed due to the social distancing caused by the prevalence of pandemics.
Our stock pick
As these new trends emerge and begin to shape our lives in a lasting way, let’s focus on some of the stocks that are sure to gain in the medium to long term.
based in Brooklyn, NY Etsy, Inc. ETSY is primarily an e-commerce service provider that operates a two-way marketplace platform called Etsy.com. It enables various retailers to list and sell their unique and creative products from categories such as housewares and furnishings, jewelry and personal accessories, clothing, craft supplies, paper and party supplies, and beauty and personal care through its marketplace platform.
Etsy is benefiting from increasing marketplace and services sales. Solid momentum among active sellers and buyers remains a big plus. In addition, the coronavirus-induced e-commerce boom and soaring mask sales are tailwinds. In addition, the company has had a solid draw from reactivated buyers that is doing well to grow. Also, improvements in search and discovery are driving buyer dynamics. Additionally, a robust Etsy advertising program is helping the seller base grow.
The company currently has a Zacks rank of 1. The expected long-term earnings growth rate is 25.3%, compared to the industry’s 22.2% growth. You can see the full list of current Zacks # 1 Rank (Strong Buy) stocks here.
Ethan Allen Interiors Inc. ETH is a leading interior design company as well as a manufacturer and dealer of high-quality home furniture. The company offers free interior design services to its customers and sells a full range of furniture products and decorative accessories through ethanallen.com and a network of design centers in the US and abroad.
The company’s expected earnings growth rate for the current year is 244%. The Zacks Consensus Estimate for 2021 has improved 49.2% over the past 90 days. Ethan Allen currently has a Zacks Rank # 3 (Hold).
Packaging Corporation of America PKG manufactures and sells corrugated and corrugated board packaging products in the United States. Specifically, the company offers e-commerce packaging solutions, and its e-commerce website provides users with access to a catalog of packaging designs.
The Zacks Consensus Estimate for this year’s earnings rose 0.4% over the past 60 days. The company’s expected earnings growth rate for the current year is 16.4%. The stock currently ranks # 3 in Zacks.
PayPal Holdings, Inc. Due to its strong product portfolio and a two-sided platform, PYPL has developed into one of the largest providers of online payment solutions, which enable it to offer both its customers and merchants a smooth and secure transaction option.
The company takes a technology- and platform-independent approach so that merchants of all sizes can quickly and easily perform a digital checkout online, on mobile devices and in-store on all platforms and devices, and receive payments from their customers securely and seamlessly.
The company currently has a Zacks Rank # 3 (Hold). The expected earnings growth rate for the current year is 17.8% versus the industry’s expected 1.2% decline
The hottest tech mega-trend of all
Last year the company had worldwide sales of 24 billion US dollars. It is set to explode to $ 77.6 billion by 2020. Famed investor Mark Cuban says it will make “the world’s first trillionaires,” but that should still leave a lot of cash for regular investors who make the right trades early on.
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Packaging Corporation of America (PKG): Free Stock Analysis Report
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