Trading professionally requires a lot more than analyzing the news cycle and confirming certain sentiments with chart patterns and technical analysis. The best in the field get paid the most because of one single ability: connecting the dots. Today, investors will have a chance to exercise this muscle through the recent release of retail sales data for the United States economy.
Connecting the dots in this report will show a clear pattern in the retail sector, where consumers are starting to pull back on some of the more discretionary spending items in the market while also rerouting their spending habits to defensive items. However, there is one area where spending did not pull back, and whether it is due to convenience or better pricing dynamics, non-store retailers saw the biggest expansion in sales for the past month.
Growing by 2.4% over the past month and 6.5% over the year, the industry’s momentum is definitely going to help names in the E-commerce space gain a share of this momentum. That is where stocks like Amazon.com (NASDAQ:AMZN), Shopify (NYSE:SHOP), and even eBay (NASDAQ:EBAY) come into play to give investors a new leg of upside momentum and potential gains in the coming quarters.
1. Amazon’s Untouchable Value Add
While institutions have lost faith in the consumer discretionary sector, as this list of stocks being dumped by fund managers all seems to focus on the space’s cyclical nature, Amazon has been spared and has actually gone in the opposite direction.
As of February 2025, up to $81 billion of institutional capital was plunged into Amazon stock for the past quarter, with those from Mackenzie Financial leading the latest wave of buying with their 28.1% boost in holdings for Amazon stock, bringing their net position to a high of $1.4 billion today.
With the growth in non-store retailer sales, Amazon’s value add comes through its sheer scale in the marketplace, allowing its platform to have better prices, information, and delivery services than other competitors. This is why consumers may still choose to operate at Amazon even as they pull back in most cyclical spending.
This might be one reason why Wall Street analysts have landed on a consensus price target of $260.6 per share in Amazon stock. This target calls for up to 33.2% upside from where Amazon stock trades today, not a common view for a company as big as this one.
2. Shopify Commands a Premium For a Reason
There’s an encrypted message in the stock market regarding how a stock is perceived, and that can be deciphered through the current direction of valuation multiples. By trading at a price-to-book (P/B) ratio of 10.8x today, Shopify stock commands a premium compared to the computer sector’s 6.2x valuation today.
While some may think of this as expensive, history and professional traders will show that the market is always willing to pay a premium for the stocks it believes will outperform the peer group and the broader market in the near future.
Suppose the pricing dynamics and benefits that stem from the non-store retailer scale and business model are the focus. In that case, it makes sense to see Shopify, the middle man in this theme, command a premium and further upside from today’s prices.
According to analysts from Jefferies Financial, as of February 2025, Shopify stock’s fair value lies around the $130 per share mark. This new view not only calls for the stock to reach a new 52-week high but also implies that there’s a net upside potential of up to 37% from where the price sits today.
3. Momentum in eBay Drove Short Sellers Away
Out of the group, eBay stock is the one being favored the most when it comes to price action and momentum. eBay now trades at 94% of its 52-week high level, above both Amazon and Shopify, to show investors more optimism coming out of investors and traders today.
As a result of this optimistic price action and momentum in eBay stock, investors can see that up to 9.3% of the company’s short interest has declined over the past month alone, a clear sign of bearish capitulation as these short sellers face both the fundamental and technical data supporting a higher price for eBay stock in the coming months.
Like its peers in this list today, eBay has been the subject of recent institutional buying. Allocators from Ameriprise Financial decided to boost their holdings in the stock by 12.4% as of February 2025, netting their stake at $1.8 billion today, or 5.9% ownership in the company, to give investors another vote of bullish confidence in their potential buys.