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With shares up by a whopping 92% year to date, Global-e Online (NASDAQ: GLBE) has richly rewarded investors in 2023. But with rapid top-line growth, a strong moat, and profitability possibly on the horizon, its rally appears far from over. Let’s dig deeper into why this e-commerce stock looks like a great buy in September and beyond.

E-commerce is still a growth opportunity.

In the years following the COVID-19 pandemic, e-commerce has lost some hype to other opportunities like artificial intelligence, which likely now attracts more attention and investment capital. The maturity of Amazon and other industry leaders adds to the perception that online shopping is old news. But that isn’t necessarily the truth.

Analysts at Facts and Figures expect the global cross-border e-commerce market to expand at a compound annual growth rate (CAGR) of 26% to $7.9 trillion as globalization and increasing internet penetration help connect the world.

Israel-based Global-e Online focuses on this niche — helping retailers sell their products internationally by handling common hiccups like customs clearance, logistics, and returns. The company’s fantastic growth rates speak to the potential opportunity.

The business is firing on all cylinders.

Second-quarter earnings were a slam-dunk success. Revenue jumped 53% year over year to $133.3 million based on growth in the value of merchandise handled on the platform. Global-e is attracting brands from all over the world, including designer fashion labels such as LK Bennet, Club L, and Diesel, which all onboarded this quarter.

The company is also working with the business-to-business (b2b) e-commerce platform Shopify through a partnership called Shopify Markets Pro designed to help small businesses sell internationally and optimize their global stores from within their Shopify interface. The service is currently only available in the U.S., but is expected to roll out to the U.K. (and possibly other countries) in the future.

The fact that Global-e can secure strategic partnerships with mainstream e-commerce ecosystems speaks to the competitive moat of its services.

Image source: Getty Images.

But while Global-e’s topline is firing on all cylinders, the company is not yet profitable according to Generally Accepted Accounting Principles (GAAP) — which is not an unusual situation for growth-focused businesses. In the second quarter, the company generated an operating loss of $35.5 million because of high expenses. But the good news is that this is a significant improvement from the loss of $48.8 million last year, which shows it is on track to scale into profitability.

What about the valuation?

After almost doubling in 2023, Global-e’s stock is nowhere near as cheap as it was at the start of the year. With a price-to-sales (P/S) multiple of 13, shares are significantly more expensive than e-commerce-related alternatives like Amazon, which is valued at 2.6 times revenue. With that said, you generally get what you pay for in the stock market.

Global-e’s high price tag likely reflects its rapid revenue growth rate and potential to generate significant profits when it scales up in the future. The company looks to be in the opening stages of reaching its potential, and shares look like a buy for long-term investors.

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Will Ebiefung has positions in Global-e Online. The Motley Fool has positions in and recommends, Global-e Online, and Shopify. The Motley Fool has a disclosure policy.

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