2 E-Commerce Stocks To Buy In January, 2 To Avoid

2020 has been a tumultuous year for the e-commerce industry. From record market highs to dizzying selloffs, most e-commerce company stocks have experienced rollercoaster performance.

The news of successful coronavirus vaccine deployment, on one hand, has shaken investor confidence in this industry. Their fear being that once economies re-open the demand for e-commerce services will flag. However, a second strain of COVID-19 that has necessitated new lockdowns across Europe and renewed travel bans throughout the world has rekindled investors’ confidence in e-commerce stocks.

The e-commerce industry has become a vital part of many peoples’ daily lifestyle owing to the convenience it delivers. It was well established even before the pandemic and is expected to remain relevant in the years to come. Stocks such as Chewy, Inc. (CHWY - Get Rating) and Carvana Co. (CVNA - Get Rating) are well-positioned to grow in the upcoming months, as demand for remote shopping continues to increase.

E-commerce companies in China, in contrast, are currently being reviewed by regulators to curb their growth and moderate their monopolistic behavior. Triggered by Alibaba Holdings Group Ltd.’s (BABA - Get Rating) subsidiary Ant Financial Services’ IPO, antitrust regulation related disruptions have trickled down to relatively smaller players in the country, such as Baozun Inc. (BZUN - Get Rating). This, combined with a recent law passed by the U.S. government that forces foreign entities listing their shares on U.S. exchanges to comply with U.S. auditing standards, reflects cloudy growth prospects for these companies, which we believe are best avoided for now.

Stocks to buy:

Chewy, Inc. (CHWY - Get Rating)

CHWY sells pet grooming and food supplies through its website and mobile platform. As a subsidiary of PetSmart, Inc., CHWY has partnered with more than 2000 brands to provide a wide range of pet supplies across the country. The company has an ISS Governance Quality Score of 2, indicating healthy management and corporate governance.

CHWY’s CEO Sumit Singh was named in the 2020 ‘Bloomberg 50’ group, which comprises the most influential and innovative entrepreneurs this year. The company has delivered impressive results over the past quarters under Singh’s leadership.

Earlier in November, CHWY listed Dogness International’s products on its website, effectively diversifying its product pipeline during the holiday season. The company also launched its pet telehealth service ‘Connect with a Vet’ and expanded its Pharmacy business RX this month, making it a leading supplier of a wide range of pet services in the country.

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