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As an industry, e-commerce has struggled since the pandemic. After getting their fill of online shopping during COVID, consumers have largely shifted their spending to services that were off limits during the health crisis, like travel and eating out at restaurants.

However, while nearly every e-commerce stock is down from its pandemic-era peak, some are continuing to put up strong results despite the current headwinds. Let’s take a look at two stocks that deserve some attention from investors right now.

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1. MercadoLibre

MercadoLibre (NASDAQ: MELI) is Latin America’s leading e-commerce company. In addition to its online retail business, it also has a thriving fintech business, MercadoPago, that includes a mobile point-of-sale system for merchants, credit cards, and a digital payment app.

In many ways, the company has followed a similar strategy to Amazon, leveraging its direct-selling e-commerce business into a number of more profitable businesses. The strength of that approach was on display in its third-quarter earnings report, which it released earlier this month.

Revenue jumped 69.1% on a currency-neutral basis to $3.8 billion with gross merchandise volume up 59% and total payment volume jumping 121%, both in constant currency terms.

What was particularly impressive about MercadoLibre’s results was that its operating margin exploded in the quarter, jumping from 11% to 18.2%. Meanwhile, operating income more than doubled for the fourth quarter in a row, reaching $685 million.

Among the segments driving that performance was advertising, where currency-neutral revenue grew by more than 70%. Its credit business also continues to expand with an acceleration in originations and improving loan performance.

MercadoLibre has fended off challenges from Amazon, Sea Limited, and others, showing it has well-established competitive advantages, which also include its MercadoEnvios logistics network. With profitability ramping up and revenue still growing at a blistering pace, MercadoLibre looks ripe for new buyers, as the stock still has a lot of upside potential in Latin America’s expanding middle class.

2. Shopify

Shopify (NYSE: SHOP) shares fell more than 80% from their peak during the pandemic to their trough in the tech crash. Revenue growth slowed significantly as the pandemic tailwinds rolled off and the company started reporting losses again.

However, the company is still delivering solid top-line growth, and it’s returned to profitability, thanks in part to a price hike on its subscriptions.

In the third quarter, gross merchandise volume rose 22% to $56.2 billion, driving revenue up 25% to $1.7 billion. The company also saw strong growth further down the income statement, with gross profit up 36% to $901 million, and operating income reversed from a loss of $346 million to a profit of $122 million, giving it an operating margin above 7%.

Shopify had several false starts earlier, including an attempted entry into logistics. It acquired Deliverr for more than $2 billion before selling it to Flexport, a sign that it would return to its core strengths in technology. Meanwhile, the company has partnered with Amazon’s Buy with Prime program to provide free shipping for Prime members from Shopify sellers.

The company also continues to add new features, introducing a retail plan for brick-and-mortar merchants, which could significantly expand its addressable market. It also added new POS devices.

Shopify’s guidance also shows the company expects a strong holiday season in spite of the broader headwinds in the consumer discretionary sector. It called for fourth-quarter revenue growth in the high teens or the low-to-mid-20% range, excluding the impact of losing the logistics business. Management also expects the gross margin to expand 300 to 400 basis points to 46%, primarily due to the loss of the logistics business.

Shopify is the clear leader in e-commerce software, and the company should benefit from a recovery in spending on consumer discretionary goods when it comes. Its ability to deliver strong growth in a difficult environment shows that the business remains resilient and is essential for thousands of online merchants, a bullish signal ahead of an economic recovery.

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Jeremy Bowman has positions in MercadoLibre, Sea Limited, and Shopify. The Motley Fool has positions in and recommends MercadoLibre, Sea Limited, and Shopify. The Motley Fool has a disclosure policy.

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