eCommerce Winners

Currently sheltered in place and knee deep in the COVID-19 pandemic, it’s time to give some thought to what comes next. How will things change after this pandemic passes? It is possible of course that we return to our same old lives. To a certain degree we will have to otherwise what really is the point to life. But certain things probably will change. We cannot know with certainty what will come next, but I think certain trends will intensify in the future.

Probably the easiest trend to spot is the continued shift to online commerce. Shopping online is getting even more of a boost than it was before COVID-19. U.S. online retail sales are expected to hit $892 billion by 2022, says eMarketer. That's a compound average annual growth rate of 14.4% — quadruple the retail industry's overall growth.

Three major beneficiaries of that trend continuation are most certain to be Amazon (AMZN), Alibaba (BABA) and JD.com (JD). All play major roles in eCommerce and there appears plenty of room for future growth.

In addition to individual stocks, there are a couple of online retail ETF’s that you can look at as well. One is ProShares Long Online/Short Stores ETF (CLIX) which is a concentrated bet on the shift to online shopping. The ETF is 23% weighted to Amazon and 11% exposed to Alibaba Group. At the same time, the fund uses a short-selling strategy to profit from falling values of retailers that do all their sales from physical stores.

Another ETF, ProShares Online Retail ETF (ONLN) puts 29% of its portfolio in Amazon, more than any other ETF, according to ETF.com. Amazon continues to be a relative winner, gaining 2% this year. The ETF holds 25 total online retailers' shares and has $21 million in assets. It charges 0.58% annually.

Online commerce is most certainly one trend that will be your friend for awhile to come. Next time we’ll take a peek at cloud computing.