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Joe Tenebruso

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The online-retail revolution is still just getting started, and these industry leaders could deliver stellar returns.

Amazon (NASDAQ:AMZN) has been one of the market’s best performing stocks. The company’s share price has skyrocketed roughly 2,000% over the last 10 years thanks to a dominant position in both e-commerce and cloud computing services.

Amazon remains one of the best companies in the world and a promising long-term investment, but three Motley Fool contributors have weighed in with e-commerce stocks that could deliver even better returns. Read on to see why they think Alibaba (NYSE:BABA), JD.com (NASDAQ:JD), and Shopify (NYSE:SHOP) have what it takes to beat the online-retail leader’s performance.

IMAGE SOURCE: GETTY IMAGES.

China’s online retail leader

Keith Noonan (Alibaba): Alibaba is sometimes referred to as “the Amazon of China” because it also boasts a market-leading position in its home country’s online-retail space. Today, Alibaba has a market capitalization of roughly $787 billion — or roughly half of Amazon’s current market cap. Considering that China has a population of roughly 1.4 billion people and is on track to see strong economic growth and a big increase in per-capita discretionary spending power, it’s not unreasonable to think it could outperform the American company it’s often compared to.

China’s e-commerce market already trounces the size of the online retail market in the U.S., and it’s on track to grow at a much faster pace. eMarketer estimates that Chinese e-commerce spending will have grown from roughly $1.9 trillion in 2019 to $4.1 trillion 2023. That incredible backdrop of growth should create huge tailwinds for Alibaba, and there’s plenty of room for expansion past the end of that projection period. Taking a page out of the Amazon playbook, Alibaba is also making a big play in the cloud services space, and revenue for the segment grew 59% year over year last quarter.

Is Alibaba a better company than Amazon today? Probably not. Few companies are. However, it has powerful competitive strengths and explosive growth opportunities of its own, and there’s a good chance it will prove to be a better stock for investors who buy at current prices.

This Chinese e-retailer could outperform Alibaba

Will Healy (JD.com): In the Chinese e-commerce market, investors tend to compare JD.com it to its larger rival Alibaba. However, JD.com is the second-largest online retailer in China. Moreover, it has expanded its network into other Asian countries and has partnered with Walmart in China.

Where JD.com stands out over Alibaba is in its logistics. Alibaba tends to attract most of the comparisons to Amazon since both companies operate cloud computing businesses.

Nonetheless, it is JD.com that has built the Amazon-like logistics network. JD.com typically warehouses and owns the merchandise it sells. In contrast, Alibaba tends to act more like a middleman between manufacturers and customers.

Fortunately for investors, the appeal of JD.com appears to also extend to its stock. JD.com trades at a forward P/E ratio of about 34. From that perspective, it implies a slight premium above Alibaba’s forward multiple of about 30.

However, JD.com is generating more than double the earnings increases. In the most recent quarter, JD.com’s adjusted profits rose 53% to $0.50 per diluted ADS. This compares with an 18% increase in Alibaba’s adjusted earnings over the same period. Moreover, for the upcoming quarter, analysts forecast a 38% profit increase for JD.com from the year-ago quarter, versus just 15% growth for Alibaba in the 12-month timeframe.

The overall growth of global e-commerce will probably boost most of the stocks in this industry. Nonetheless, JD.com’s profit increases relative to its valuation make it one of the better buys among e-commerce stocks.

The online retail operating system

Joe Tenebruso (Shopify): There aren’t many businesses better than Amazon. The e-commerce juggernaut dominates the online retail industry in the U.S. and many other parts of the world. Even at this point, Amazon’s growth prospects remain very attractive. But if you’re looking for an e-commerce company that’s growing even faster than Amazon, take a look at Shopify.

Shopify helps entrepreneurs and established businesses build and scale their online retail operations. Its services include online store development, marketing, payment processing, shipping, and business financing. A thriving third-party application ecosystem containing more than 4,000 apps helps to broaden and strengthen the value Shopify provides to its customers.

COVID-19 and related social distancing measures are accelerating the shift of retail sales to online channels. This is boosting demand for Shopify’s services, which were already in high demand before the coronavirus pandemic. Shopify’s revenue soared 97% year over year to $714.3 million in the second quarter, fueled by a 71% surge in new store creations and a 119% rise in gross merchandise volume — essentially, the total dollar amount of sales merchants made on its platform — to $30.1 billion.

Better still, Shopify is becoming more profitable as it scales its revenue base. Its adjusted operating profits increased to $113.7 million, or 16% of revenue, up from $6.4 million, or 2% of revenue, in the year-ago quarter.

Best of all, Shopify’s expansion is still in its early innings. The company pegs its addressable market for small businesses alone at $78 billion, leaving plenty of room for growth in the years ahead.

Author: Keith Noonan, Joe Tenebruso, And Will Healy

Source: Fool: 3 E-Commerce Stocks That Are Better Than Amazon

Here’s where to invest your money right now.

Growth stocks can make you rich. Rapidly expanding companies can grow their sales and profits exponentially over time, thereby creating enormous wealth for their investors along the way.

The key, of course, is knowing which stocks to buy — and when. One way to do so is to find powerful long-term trends that can propel the growth of even the largest industries — and the companies best positioned to profit from them.

Here are five outstanding stocks with particularly powerful growth drivers.

THESE ARE THE GROWTH STOCKS YOU’RE LOOKING FOR. IMAGE SOURCE: GETTY IMAGES.

NVIDIA

NVIDIA (NASDAQ:NVDA) gives investors multiple ways to win. Its graphics processing units (GPUs) are increasingly being used by cloud computing giants such as Google Cloud to accelerate their data center operations. Its GPUs also help to power cutting-edge gaming systems, which are benefiting both from higher demand for home-based entertainment during the COVID-19 crisis and the growth of competitive gaming around the world.

Better still, NVIDIA’s chips are finding new uses in areas such as healthcare, autonomous vehicles, and telecommunication networks. These are potentially massive new markets for NVIDIA, and they should help to fuel its growth for many years to come.

DocuSign

DocuSign (NASDAQ:DOCU) is helping businesses adapt to a coronavirus-filled world. Its software helps people create, sign, and manage digital agreements. DocuSign’s e-signature technology was already enjoying solid adoption before the COVID-19 crisis, and the need for social distancing during the pandemic has only served to boost demand for its services.

As the e-signature leader, DocuSign is helping to accelerate the digital transformation megatrend. And with many businesses still in the early innings of transitioning their paper-based processes to the cloud, DocuSign has many years of strong growth still ahead.

Alibaba

COVID-19 is also accelerating the growth of e-commerce and digital payments. Alibaba (NYSE:BABA) stands to benefit from these industries’ expansion in China more than any other company.

Alibaba dominates the online retail market in China, where e-commerce sales are forecasted to surpass $4 trillion annually by 2023, up from $1.9 trillion in 2019, according to eMarketer. Alibaba also owns a 33% stake in Ant Group, which operates Alipay, a leading online and mobile payment service in China. This gives Alibaba — and its shareholders — two powerful ways to profit as retail sales shift online in the world’s most populous nation over the coming decade.

PayPal

PayPal (NASDAQ:PYPL) likewise stands to profit from the e-commerce industry’s impressive growth. In fact, the digital payments leader is helping to drive it.

PayPal makes online sales easier, faster, and more secure. It eliminates the need for online shoppers to expose their credit or debit card account numbers each time they make a purchase. In doing so, it helps to protect them from those who would use this information to make fraudulent purchases. More confident consumers make more purchases, much to the pleasure of online merchants.

PayPal also owns the popular peer-to-peer payments app Venmo. This provides its shareholders with another great way to profit from the surging growth of digital payments and cash transfers around the world.

Salesforce

Like DocuSign, Salesforce.com (NYSE:CRM) is helping companies digitally transform their operations. The tech titan’s cloud-based customer relationship management software makes it easier to conduct business remotely. It also tends to be more cost-effective and secure than traditional software.

Moreover, Salesforce’s data integration platform — which helps companies aggregate and analyze data from a multitude of sources — is widely considered best-in-class. Additionally, its Einstein artificial intelligence platform is helping to position Salesforce as a leader in increasingly important fields such as natural language processing, image classification, and automatic speech recognition. Together, these advanced technologies should help to fuel Salesforce’s relentless expansion in the decade ahead.

Author: Joe Tenebruso

Source: Fool: $10,000 Invested in These 5 Growth Stocks Could Make You a Fortune Over the Next Decade

Priceless wisdom from Warren Buffett’s right-hand man at Berkshire Hathaway.

Charlie Munger has helped Warren Buffett build Berkshire Hathaway (NYSE:BRK-A) (NYSE:BRK-B) into a $540 billion masterpiece of American capitalism. As the company’s vice chairman, he has amassed a billion-dollar fortune and created vast wealth for Berkshire’s shareholders along the way.

Yet Munger’s greatest contribution is arguably the incredible quantity of wisdom he’s shared with investors over the past several decades. Here are a dozen pieces of this legendary investor’s most valuable advice.

1. “Those who keep learning will keep rising in life.”

Reading voraciously will make you a better investor and help you improve in many other areas of your life. Follow your interests, but read broadly and deeply.

2. “Knowing what you don’t know is more useful than being brilliant.”

Staying within your circle of competence helps to reduce risk. It’s good to continuously expand your base of knowledge and understanding, but venturing too far outside it when selecting investments is a recipe for disaster.

3. “One of the greatest ways to avoid trouble is to keep it simple.”

There are no extra points for difficulty when it comes to investing. And often, the best businesses are the ones that are easiest to understand.

4. “People calculate too much and think too little.”

Financial figures are important, but they don’t tell the whole story. Taking the time to understand the qualitative aspects of a business — a company’s culture, management’s vision for the future, etc. — can give you an edge over investors who focus only on the quantitative data.

5. “We have three baskets for investing: yes, no, and too tough to understand.”

You don’t need to make a buy or sell decision on every stock. Focus only on the businesses you understand well, and leave the rest for other investors.

6. “A great business at a fair price is superior to a fair business at a great price.”

Buying an undervalued stock can result in profits when you sell, but buying a business with powerful and sustainable competitive advantages, and then holding onto it for many years, can help you build incredible long-term wealth.

7. “Success means being very patient, but aggressive when it’s time.”

You don’t need a lot of great investment ideas to build wealth in the market. But to grow rich, you’ll need to invest significant sums in your best ideas.

8. “The big money is not in the buying and the selling, but in the waiting.”

Well-chosen stocks can rise many times in value. But it takes time. The ability to sit and wait for these gains to materialize is crucial to generating truly life-changing returns in the stock market.

9. “You must force yourself to consider opposing arguments. Especially when they challenge your best-loved ideas.”

Don’t succumb to confirmation basis. Instead, constantly search for new information that might disprove your investment theses. If you come to realize that your expectations were wrong, adjust your portfolio accordingly — and without delay.

10. “Don’t drift into self-pity because it doesn’t solve any problems. Generally speaking, envy, resentment, revenge, and self-pity are disastrous modes of thought.”

Life can hit you. And when it does, it often hits hard. But rather than wallow in our struggles — whether financially related or otherwise — we need to pick ourselves back up and find a way to move forward.

11. “Invert, always invert.”

It can often be useful to look at a problem in reverse. What do you want to avoid? Act in a manner that reduces your chances of failure, and you’ll find your path to success.

12. “Spend each day trying to be a little wiser than you were when you woke up. Discharge your duties faithfully and well. Step by step you get ahead, but not necessarily in fast spurts. But you build discipline by preparing for fast spurts … slug it out one inch at a time, day by day. At the end of the day — if you live long enough — most people get what they deserve.”

This passage needs no explanation, so to quote Munger one final time, “I have nothing further to add.”

Author: Joe Tenebruso

Source: Fool: 12 Investing Tips From Charlie Munger That You Need to Hear

The crypto world and traditional financial system are becoming more integrated every day.

This past week, cryptocurrency giant Ripple increased its equity stake in MoneyGram International (NASDAQ:MGI). Ripple initially invested $30 million in the money transfer company in June. On Nov. 25, Ripple announced that it was investing another $20 million, bringing its stake in MoneyGram to 9.95%. As part of the deal, Ripple also obtained warrants that give it the right to increase its stake to approximately 15% in the future.

Notably, Ripple’s latest stock purchase was made at $4.10 per share — a sizable premium to MoneyGram’s current market price near $3. Bulls would say that the purchase price suggests Ripple believes MoneyGram’s stock is undervalued and has significant upside potential. Bears, however, would say that Ripple is paying a premium so MoneyGram will continue to use its XRP digital token in its cross border payment operations.

For his part, MoneyGram Chairman and CEO Alex Holmes continues to rave about Ripple’s technology.

“Our partnership with Ripple is transformative for both the traditional money transfer and digital asset industry — for the first time ever, we’re settling currencies in seconds,” Holmes said. “This initial success encourages us to expedite expanding our use of On-Demand Liquidity.”

Ripple’s On-Demand Liquidity (ODL) solution leverages its controversial XRP digital token to “send money globally, instantly, and reliably for fractions of a penny.” MoneyGram is currently processing 10% of its Mexican peso foreign exchange transaction volume through ODL. It also recently began using the technology in other cross-border corridors.

“Last month, we announced that MoneyGram began using On-Demand Liquidity for payments to the Philippines, and we’re excited to support MoneyGram’s further expansion into Europe and Australia,” Ripple CEO Brad Garlinghouse said. “Digital assets and blockchain technology have the potential to make a tremendous impact on cross-border payments — MoneyGram and Ripple is an example of that.”

Partnerships like the one with MoneyGram are helping to fuel usage of Ripple’s digital currency. XRP transactions recently rose to new highs above 4 million per day, dwarfing that of popular cryptocurrencies Bitcoin and Ethereum.

Critics have argued that most of the efficiencies gained from Ripple’s payments technology can be had without the use of XRP. But if MoneyGram and other financial institutions realize tangible benefits from the use of Ripple’s new XRP-powered On-Demand Liquidity service, it’s possible that the skeptics will be proved wrong. Still, until that time, Ripple’s digital token remains a high-risk investment.

Author: Joe Tenebruso

Source: Fool: Ripple’s $50 Million Investment in MoneyGram Is Fueling XRP Usage

The marijuana company received a cultivation license for a huge new greenhouse.

Canadian healthcare regulator Health Canada awarded Aphria (NYSE:APHA) a cultivation license for Aphria Diamond, a 1.3-million-square-foot greenhouse facility in Leamington, Ontario. With an annual growing capacity of 140,000 kilograms, the new site raises Aphria’s peak cannabis production capabilities to 255,000 kilograms a year.

“We are extremely pleased to receive the license for our long-awaited Aphria Diamond facility, which more than doubles our Canadian production capacity,” CEO Irwin Simon said in a press release. “Reaching industry-leading production levels coinciding with the expansion into new categories and new opportunities for cannabis in Canada and around the world is a transformative moment for Aphria Inc.”

Aphria Diamond is part of a joint venture between Aphria and greenhouse operator Double Diamond. Aphria will supply best practices and oversee operations, while Double Diamond is supplying land, greenhouses, infrastructure, and employees. Aphria owns a 51% stake, while Double Diamond owns the remaining 49%.

The new facility will use industrial-scale automation technology to boost the efficiency of cultivation, including aspects of its harvesting, drying, and waste management processes.

“We believe the introduction of our proprietary automation technology at Aphria Diamond will provide us with the ability to cultivate high-quality cannabis with great efficiency and at an unprecedented scale,” Simon said. “As we remain focused on sales growth and profitability, this unique advantage is expected to enable Aphria to continue to create long-term value and drive the evolution of the industry through innovation and the development of leading brands.”

The low-cost producer wins

The ability to produce high-quality cannabis at relatively low cost will be a key determinant of Aphria’s success. Like most commodity-based industries, the cannabis producers that survive and thrive will be those that can use technology and scale advantages to lower their production costs to below that of their competition.

This will be even more important once Canada’s cannabis market becomes saturated, as is expected to occur in the next few years. Once supply catches up to demand, it will ignite a battle for market share — one that will be won by the companies that can produce cannabis at the lowest cost.

Global ambitions

Aphria’s international expansion efforts will also play a key role in determining its success. The Canadian company has an operational presence in more than 10 countries across five continents. This includes a strong foothold in Germany, which is expected to be one of the largest cannabis markets outside North America.

Author: Joe Tenebruso

Source: Fool: Aphria Doubles Its Cannabis Production Capacity

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