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Zacks Investment Ideas feature highlights: Shopify, PDD, Alibaba, JD.com and MercadoLibre

For Immediate Release

Chicago, IL – November 29, 2023 – Today, Zacks Investment Ideas feature highlights Shopify SHOP, PDD Holdings PDD, Alibaba BABA, JD.com JD and MercadoLibre (MELI).

Pinduoduo Joins E-Commerce Party, Blows Away Estimates

E-commerce companies have much to be thankful for following the biggest shopping weekend of the year. Black Friday online sales jumped 7.5% year-over-year to a record of $9.8 billion. According to Mastercard SpendingPulse, U.S. retail sales for both online and physical storefronts rose 2.5% from last year’s Black Friday. Data from Adobe Analytics suggests that consumers spent another $12.4 billion yesterday during Cyber Monday.

Shopify stock soared more than 4% yesterday, hitting a 52-week high after the e-commerce platform stated that merchants recorded $4.1 billion in sales on Black Friday. That marked an increase of more than 20% from last year.

Overseas E-Commerce Platforms Join the Party

The celebration hasn’t been constricted to the U.S., as foreign companies also enjoyed stellar growth. Pinduoduo parent PDD Holdings saw its shares soar nearly 20% Tuesday morning after delivering upbeat third-quarter results. The company operates Pinduoduo, an e-commerce platform which offers products in various categories such as agricultural produce, apparel, food and beverage, furniture and household goods, cosmetics, fitness items, and auto accessories.

PDD also operates the cross-border platform Temu, its international e-commerce arm that is expected to generate more than $16 billion in revenue this year. Temu is seen as a possible contender to Amazon in the United States. Since its initial launch, Temu has rapidly grown its presence and is now available in 48 countries.

PDD reported Q3 adjusted earnings of $1.64/share on sales of $9.7 billion, well ahead of the $1.25/share and $7.7 billion respective estimates. Sales surged 94% year-over-year, while the bottom line increased 35%. The company has handily outpaced rival Alibaba and competing Chinese e-commerce firm JD.com, with PDD shares surging more than 70% this year:

PDD is a component of the Zacks Internet – Commerce industry group, which currently ranks in the top 15% out of approximately 250 industries. Because it is ranked in the top half of all Zacks Ranked Industries, we expect this group to outperform the market over the next 3 to 6 months.

Historical research studies suggest that approximately half of a stock’s future price appreciation is due to its industry grouping. In fact, the top 50% of Zacks Ranked Industries outperforms the bottom 50% by a factor of more than 2 to 1. By targeting stocks contained within the top industry groups, we can dramatically improve our odds of success.

Another stock within this group that has been outperforming lately is Latin-American e-commerce giant MercadoLibre. Yesterday, the company said sales are pacing ahead of last November’s total by 39%. One of the largest platforms in South America, MELI stock rose more than 4% yesterday and hit a new 52-week high. MELI shares have surged 88% this year thus far:

A Zacks Rank #2 (Buy) stock, MercadoLibre has exceeded the earnings mark in each of the past four quarters, with a 33% average earnings surprise over that timeframe.

Analysts covering MELI have increased their earnings estimates across the board. For the fiscal fourth quarter, EPS estimates have been raised by 13.11% in the past 60 days. The Q4 Zacks Consensus Estimate stands at $7.16/share, translating to a 120.3% improvement versus the same quarter last year. Revenues are projected to jump 37.7% to $4.13 billion.

Bottom Line

E-commerce stocks have done well this year amid resilient consumer spending. The outperformance is likely to continue as we saw, with these companies forecasting strong growth in the fourth quarter.

It’s been a November to remember for stock market bulls. A fairly busy week lies ahead, highlighted by Thursday’s release of the October PCE inflation data. Make sure to take advantage of all that Zacks has to offer to uncover leading stocks like PDD and MELI.

Disclosure: MELI is a current holding in the Zacks Headline Trader portfolio.

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.

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MercadoLibre, Inc. (MELI) : Free Stock Analysis Report

JD.com, Inc. (JD) : Free Stock Analysis Report

Alibaba Group Holding Limited (BABA) : Free Stock Analysis Report

Shopify Inc. (SHOP) : Free Stock Analysis Report

PDD Holdings Inc. (PDD) : Free Stock Analysis Report

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