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3 Best E-Commerce Stocks to Buy in May

April was a tough month for growth investors; the bear market continued, challenging even the most optimistic investors. Many stocks are setting new lows for the year — but where many see disaster, one can also see opportunity.
Many of the best-performing e-commerce stocks over the past five years have been sold into the ground over the past year. You’ll see in a minute that a number of these companies are dealing with some short-term headaches, but there’s no need to overthink it.
These three stocks rule e-commerce, have bright futures ahead, and are worth considering buying on their current weakness.
1. Amazon
U.S. e-commerce giant Amazon (NASDAQ: AMZN) recently reported first-quarter earnings for 2022 and saw revenue growth slow to 7% year over year. Revenue grew 44% year over year in Q1 of 2021, so such a dramatic slowdown hasn’t helped investors warm up to Amazon’s stock in recent months. It’s now down roughly 38% from its high, the stock’s most significant drawdown in over a decade.
Image source: Getty Images.

Are Amazon’s best days behind it? While it has grown into a massive $1.3 trillion market cap company, I think that Amazon still has long-term upside. Amazon Web Services — its cloud computing platform and the company’s most profitable segment — is still growing, turning in 37% year-over-year growth in this year’s first quarter.
Meanwhile, Amazon is the market-share leader in U.S. e-commerce, which has only penetrated roughly 13% of overall retail spending. It recently announced “Buy with Prime,” which lets merchants integrate Amazon Prime into their own online store — a move that could help expand Amazon’s already massive footprint in retail. Investors can use this market volatility to pick up shares of one of e-commerce’s most dominant businesses.
2. Shopify
Software company Shopify (NYSE: SHOP) is a true innovator in the e-commerce space. Its platform enables anyone to open and operate an online store, giving merchants of all sizes the ability to compete online. More than a million merchants use Shopify and collectively provide the company with the second-largest share of the e-commerce market in the United States behind Amazon.
The stock has fallen more than 70% from its high, the largest drawdown in Shopify’s history as a public company. The company grew revenue 22% year over year in this year’s first quarter, lower than investors may have been looking for. And as noted, Amazon is launching a service to compete head-to-head with Shopify, called “Buy with Prime.”
Slowing growth and competition are fair concerns that investors may have about Shopify. However, I would argue that the stock’s dramatic decline compensates investors for the additional risk. Over the years, management has led Shopify from an underdog to a prominent e-commerce company.
So investors could be glad they bought lower-priced shares if Shopify can work through these short-term challenges.
3. MercadoLibre
E-commerce is thriving in emerging markets, and MercadoLibre (NASDAQ: MELI) is king in Latin America. The company does e-commerce, logistics, and fintech, so it touches every aspect of a purchase, from ordering to fulfillment to payment. The company recently reported first-quarter 2022 results and posted strong growth; revenue increased 67% year over year.
Unfortunately, fear in the market has prevented investors from appreciating the company’s strong fundamentals. The stock has fallen about 60% from its high, its most significant drop since the financial crisis in 2008-2009.
MercadoLibre has a lot of positive developments in its business, which could make the current dip a great buying opportunity for long-term investors. Latin America is among the world’s fastest-growing regions for e-commerce, and MercadoLibre’s fintech business is flourishing. In this year’s first quarter, the fintech business grew users by 31% year over year to 35.8 million while revenue grew 112%.
Latin America has a population of roughly 664 million people, so there is a lot of room for growth in the years ahead.
John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Justin Pope has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, MercadoLibre, and Shopify. The Motley Fool recommends the following options: long January 2023 $1,140 calls on Shopify and short January 2023 $1,160 calls on Shopify. The Motley Fool has a disclosure policy. –

April was a tough month for growth investors; the bear market continued, challenging even the most optimistic investors. Many stocks are setting new lows for the year — but where many see disaster, one can also see opportunity.

Many of the best-performing e-commerce stocks over the past five years have been sold into the ground over the past year. You’ll see in a minute that a number of these companies are dealing with some short-term headaches, but there’s no need to overthink it.

These three stocks rule e-commerce, have bright futures ahead, and are worth considering buying on their current weakness.

1. Amazon

U.S. e-commerce giant Amazon (NASDAQ: AMZN) recently reported first-quarter earnings for 2022 and saw revenue growth slow to 7% year over year. Revenue grew 44% year over year in Q1 of 2021, so such a dramatic slowdown hasn’t helped investors warm up to Amazon’s stock in recent months. It’s now down roughly 38% from its high, the stock’s most significant drawdown in over a decade.

Image source: Getty Images.

Are Amazon’s best days behind it? While it has grown into a massive $1.3 trillion market cap company, I think that Amazon still has long-term upside. Amazon Web Services — its cloud computing platform and the company’s most profitable segment — is still growing, turning in 37% year-over-year growth in this year’s first quarter.

Meanwhile, Amazon is the market-share leader in U.S. e-commerce, which has only penetrated roughly 13% of overall retail spending. It recently announced “Buy with Prime,” which lets merchants integrate Amazon Prime into their own online store — a move that could help expand Amazon’s already massive footprint in retail. Investors can use this market volatility to pick up shares of one of e-commerce’s most dominant businesses.

2. Shopify

Software company Shopify (NYSE: SHOP) is a true innovator in the e-commerce space. Its platform enables anyone to open and operate an online store, giving merchants of all sizes the ability to compete online. More than a million merchants use Shopify and collectively provide the company with the second-largest share of the e-commerce market in the United States behind Amazon.

The stock has fallen more than 70% from its high, the largest drawdown in Shopify’s history as a public company. The company grew revenue 22% year over year in this year’s first quarter, lower than investors may have been looking for. And as noted, Amazon is launching a service to compete head-to-head with Shopify, called “Buy with Prime.”

Slowing growth and competition are fair concerns that investors may have about Shopify. However, I would argue that the stock’s dramatic decline compensates investors for the additional risk. Over the years, management has led Shopify from an underdog to a prominent e-commerce company.

So investors could be glad they bought lower-priced shares if Shopify can work through these short-term challenges.

3. MercadoLibre

E-commerce is thriving in emerging markets, and MercadoLibre (NASDAQ: MELI) is king in Latin America. The company does e-commerce, logistics, and fintech, so it touches every aspect of a purchase, from ordering to fulfillment to payment. The company recently reported first-quarter 2022 results and posted strong growth; revenue increased 67% year over year.

Unfortunately, fear in the market has prevented investors from appreciating the company’s strong fundamentals. The stock has fallen about 60% from its high, its most significant drop since the financial crisis in 2008-2009.

MercadoLibre has a lot of positive developments in its business, which could make the current dip a great buying opportunity for long-term investors. Latin America is among the world’s fastest-growing regions for e-commerce, and MercadoLibre’s fintech business is flourishing. In this year’s first quarter, the fintech business grew users by 31% year over year to 35.8 million while revenue grew 112%.

Latin America has a population of roughly 664 million people, so there is a lot of room for growth in the years ahead.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Justin Pope has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, MercadoLibre, and Shopify. The Motley Fool recommends the following options: long January 2023 $1,140 calls on Shopify and short January 2023 $1,160 calls on Shopify. The Motley Fool has a disclosure policy.

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