You’ve seen the headlines – and if you shopped online last weekend, you were a part of the story.
Storefront retail traffic was down around 11% on Black Friday, but online shopping was up more than 17%. In other words, we’ve changed the way we’ve shopped.
Thanksgiving Day was Target Corp. (NYSE: TGT)’s best online day ever, with sales rising 40% over the previous year. And so many smartphone-wielding customers headed to Best Buy Co. Inc. (NYSE: BBY) that its website suffered outages all through the long holiday weekend.
It makes you wish you had bought into e-commerce stocks a decade ago, when online shopping was really taking off in the United States.
But there’s a rare second chance out there to get in on the ground floor of another unstoppable e-commerce trend. It’s already making gains of 45% a year – the kind that can make you truly rich.
E-Commerce Hot Spots
Today, I’m going to show you how to get in on it…
E-Commerce Hot Spots
If you’re still not convinced of e-commerce’s rise to power, a few more statistics here make my case.
A recent survey by the National Retail Federation shows that more than half of Americans plan to do at least some of their holiday shopping on the Internet this year. The trade group reported that 126.9 million, or 52.3% of all American shoppers, said they intended to buy online on the Monday after Thanksgiving, known as Cyber Monday.
Clearly, investing in e-commerce sounds like it would fit into Rule No. 3 of my Tech Wealth Secrets: Ride the Unstoppable Trends.
However, domestic e-commerce is a mature industry now. At this point, the markets have priced growth into most U.S. e-commerce stocks.
Amazon.com Inc. (Nasdaq: AMZN) is a great example, trading at $326 a share despite its thin profits.
That’s where spotting big, newly emergent trends comes in. Having analyzed and invested in technology for more than 30 years, I have a bit of an insider’s edge there, a talent for identifying opportunities others miss.
And I’ve pinpointed China and other emerging markets as the spots on the globe where the e-commerce sector still has massive upside – where it still is, indeed, an unstoppable trend.
According to a new Morgan Stanley that I dug up, China is now the world’s leader in online shopping.
Last year, China accounted for 35% of the $889 billion in global e-commerce sales. And Morgan Stanley estimates that Chinese online shopping will mushroom 80% by 2018, from last year’s average of $1,040 per person to $1,880 per person.
As the brokerage puts it, China’s e-commerce “mega-growth trend is still in its initial phase” (emphasis mine).
It’s still on the ground floor we investors are always looking for.
When you consider investing in Chinese e-commerce, Alibaba Group Holding Ltd. (NYSE: BABA) is probably the first thing you think of.
However, Alibaba presents investors with a quandary. As impressive a company as this is, the stock only recently went public and is likely to remain volatile over the next few months.
That’s why I think tech investors ought to take a good look at the Emerging Markets Internet & Ecommerce ETF (NYSE: EMQQ).
EMQQ is a perfect “ground-floor opportunity.”
Launched in mid-November, it’s a brand-new exchange-traded fund (ETF) focused heavily on China’s top e-commerce firms. And it also offers us exposure to other emerging markets like Latin America and Russia.
While many investors are worried about China’s slowing economic growth, I think this is a great time to invest in EMQQ.
EMQQ’s managers say the average revenue growth rate for the 42 firms in the fund stands at 45%. Compare that to Amazon.com’s 20% revenue growth rate.
Alibaba ranks as EMQQ’s largest holding, making up 8% of the fund – something worth cheering.
Just take a look at the huge win Alibaba scored on Singles’ Day.
In just 24 hours on Nov. 11, the Chinese e-commerce giant rang up $9 billion in sales – compare that to the $2.9 billion U.S. consumers spent last year on Black Friday and Cyber Monday combined.
It’s all the more impressive when you realize Alibaba created Singles’ Day in just 2009. And its roots, in China’s Bachelors’ Day, date back only to the 1990s.
And the holiday’s growth is just staggering. The market researchers at IDC estimate Alibaba’s Singles’ Day sales at $3.04 billion for 2012 and $5.75 billion last year. That amounts to a 196% gain in just two years.
Alibaba’s own revenue growth rate isn’t that high, but at 53.7%, it’s still very impressive.
Investing All Around China…
Of course, I wouldn’t be recommending EMQQ if Alibaba was the only big winner in its portfolio.
For example, online search firm Baidu Inc. (Nasdaq ADR: BIDU) boasts more than a 60% share of China’s search traffic. Even better, the forecasters at IResearch say Baidu holds more than 90% of China’s online search advertising market.
Plus, this savvy firm is looking for even more growth. It now has 20 million daily active users for a new mobile video app. Moreover, Baidu recently established a joint venture with Viki Inc. for a website that allows users to share and subtitle videos in more than 160 languages.
Qihoo 360 Technology Co. Ltd. (NYSE: QIHU) is another major EQMM holding. This fast-growing firm specializes in online security, with a growing emphasis on mobile devices.
As of September, Qihoo 360’s primary mobile security product reached 673 million smartphone users. That’s a 65% increase from the 408 million users Qihoo reported the year before.
… And the World
And like I said, EMQQ also gives investors exposure to leading e-commerce firms in other emerging economies.
For instance, EMQQ owns Yandex NV (Nasdaq: YNDX), known as the “Google of Russia.”
Though it dominates on the world stage, Google Inc. (Nasdaq: GOOG) is a distant second in Russia, where Yandex enjoys a more than 60% market share. Yandex also offers a news site, e-mail, an e-commerce portal and auction-based advertising sites.
For its part, Mercardolibre Inc. (Nasdaq: MELI) gives EMQQ a solid play on Latin America. Buenos Aires, Argentina-based Mercardolibre pioneered the concept of online auctions south of the border nearly 15 years ago, and it remains one of the top e-commerce firms there to this day.
Trading at just $25 per share, you’ll pay a fraction of what you’d have to spend on Alibaba or Amazon.
And for that low price, you get access to dozens of winning e-commerce stocks in countries with much more growth potential than here in the United States.
EMQQ is a rare hybrid investment. While it’s growth-oriented, this ETF also serves as a great foundational play.
If it just rises at just one-third of the 45% growth rate of the stocks it owns, that would still give us 15% gains – per year
You’ll want to hold this one for the long haul, adding to your position a little at a time. By doing so, you’ll turn the market’s volatility and short-term worries about global growth to your advantage.
After all, while we’re in the middle of the e-commerce trend here at home, online shopping is still in its unstoppable phase elsewhere around the globe.
This is your opportunity to get in on the ground floor of that trend in the world’s most populous market – and to watch your wealth grow.