Jeff Reeves's Strength in Numbers: Amazon’s stock looks tired. Consider buying shares of these five fast-growing e-commerce plays instead

Shares of Amazon have underperformed the tech-heavy Nasdaq 100 NDX, +1.15% and the S&P 500 SPX, +1.01% in 2021, even as the coronavirus pandemic forced Americans to rely on its service during the darkest days.

Given all this, it is worth considering e-commerce alternatives if you’re worried that Amazon’s best days are behind it.

Here are five smaller high-growth companies you may want to research:

Sea

Shares of Sea Ltd. SE, +1.32% are up about 45% in 2021, hitting new all-time highs as it continues its aggressive growth across Asia and Latin America.

The Singapore-based company has a broad business model capitalizing on e-commerce and digital retail operations around the world. That includes its Garena digital entertainment platform that publishes video games and offers e-sports tie-ins, the Shopee e-commerce platform and SeaMoney digital financial services that include mobile payment services.

Sea was a darling in 2020 as it rode the “stay at home trade” to great success. Revenue doubled year over year in 2020 to $ 4.4 billion, and the company’s momentum was the envy of Wall Street as Sea stock racked up roughly 640% gains on the calendar year.

But the fundamentals shown by Sea in 2021 hint that the surge in share prices were justified. Consider that in its first-quarter report in May, revenue surged by about 150% — while gross profit tripled year over year.

With its next earnings report scheduled for mid-August, Sea stock could see another leg up as it continues to prove Amazon isn’t the only e-commerce name worth watching.

Coupang

While Sea has been a cult stock for a while in some circles, one Asian e-commerce stock that is still flying under the radar for many is Korea-based Coupang Inc. CPNG, +0.13%.  South Korea’s biggest e-commerce company began trading in March after an IPO that raised $ 4.6 billion, but since then shares have drifted lower — and other cult-like stocks have won all the attention.

If you haven’t yet heard of Coupang, its model should be quite familiar. It sells various products including home goods, apparel, beauty products, sporting goods and electronics. It’s also looking beyond these tried-and-true categories to include a focus on fresh food and groceries, as well as services including travel and restaurant delivery.

Though the fundamentals are light given its recent debut, the numbers we have do show this regional e-tailer is connecting in a big way in Korea. Namely, it saw net revenue growth of 74% in its first-quarter report in May, and gross profit up 70% year over year. Total customers grew 21%, and revenue per customer surged 44%.

Admittedly, the total customer base in that quarter was just 16 million households — hardly Amazon-esque. And so far in 2021, share prices has slumped slightly, even though the S&P 500 has powered higher. But remember, this is a company that just raised $ 4.6 billion — with a “B” — and is serious about growth. Considering the language and logistical barriers to competition in the markets it serves that clearly have long-term growth potential, investors may want to consider the lull in Coupang shares a buying opportunity.

MercadoLibre

Taking a page out of the playbook of Silicon Valley stocks that boast high share prices and a refusal to split, MercadoLibre Inc. MELI, +1.42% is currently trading well above four figures — and based on recent history, seems as if it’s likely to stay there.

MercadoLibre stock has cooled off in 2021 and is sitting on a slight loss year to date, compared with an uptrend broadly for U.S. stocks. However, that’s after this Latin American stock racked up 200% gains last year. Argentina-based MercadoLibre is hardly slowing down, however, as in the first quarter it reported 70 million active users — an increase of 62% above the just over 43 million users in the prior year. Gross merchandise volume was up even more at a 77% year-over-year growth rate to just over $ 6 billion, compared with $ 3.4 billion in the first quarter of 2020.

What’s really exciting for investors, however, is that the gains in core e-commerce transactions is supplemented by continued growth into financial services. MercadoLibre reported an impressive $ 2.9 billion in payment volume through its mobile wallet platform, and its Mercado Credito lending platform saw its portfolio grow to $ 576 million — more than doubling over the prior year.

Amazon has taught e-commerce companies that dominating all aspects of the consumer experience is how to truly build a dominant operation. With MercadoLibre growing sales but also increasingly connecting on the financial side, it is setting up itself to be a force in Latin America — and a real competitor to even entrenched western e-commerce brands.

Newegg

Newegg Commerce Inc.  NEGG, -5.61% is a consumer-electronics e-tailer that has a bit of a following in computer geek circles but largely has gone unnoticed by most consumers and investors. That is, until it spiked from $ 10 a share to a brief high above $ 60 a share in July.

The inciting incident was news that Newegg would carry hard-to-get Nvidia NVDA, -0.18% graphics hardware, and theoretically see a big bump in revenue and profits as a result. However, Newegg may be proving that it is much more than just a tangential play piggybacking off Nvidia as it proves there is real value to specialty retailers that serve a specific audience — and can offer in-demand products instead of knock-offs propped up by fraudulent five-star reviews.

Newegg went public via a SPAC, so it doesn’t have a lot of history to show investors just yet. But what little we know is proof that Newegg stock has potential. Consider it commands an impressive market share when it comes to core hardware items like PC processors, motherboards and the like. It also ranks as a top-five website worldwide when it comes to computer and electronics retailing sites, and is a go-to site for cryptocurrency miners as well as PC gamers.    

According to what we know about the financials, Newegg topped $ 2.1 billion in sales, thanks to its dominance in this profitable niche of computer components. And as evidenced by its recent Nvidia score, it has deep relationships with consumer electronics suppliers to ensure it is not just another Amazon clone selling cut-rate flat screens.

Shopify

If you’re interested in what life looks like for e-commerce beyond Amazon, look no further than Shopify Inc. SHOP, +3.09%. This Canada-based tech company offers a platform for any company to build out web and mobile storefronts, integrate those operations into physical retail locations and then assist with the nitty gritty of inventory, shipping and payments.

Shopify stock was one of those names that made a lot of headlines in 2020 as part of the pandemic-related surge in service providers made for social distancing. Shares surged from about $ 400 to $ 1,100 last year as a result of everyone looking to do business digitally. But in 2021, Shopify stock has tacked on almost 40% more, proving this is not just a COVID trade. After all, the e-commerce potential it helps merchants realize is real and lasting beyond the pandemic.

Case in point: Fiscal first-quarter revenue growth reported at the end of April was a red hot 110%. But what long-term investors will like even more is that its subscription service metric MRR — that is, monthly recurring revenue — accelerated 62% year-over-year to prove that many of the initial spend on building out these platforms is sticking as clients maintain their Shopify presence.

Shopify isn’t quite the scale of Amazon, but at $ 200 billion or so in market value right now with a comfortable operating profit to sustain it, investors who want to bet the field vs. Bezos & Co. could do worse than plug into Shopify stock.

Jeff Reeves is a MarketWatch columnist. He doesn’t own any of the securities mentioned in this article.