With £2,000 to invest in my portfolio, I would pick two UK e-commerce stocks.
E-commerce stocks pick #1
FTSE small-cap stock Clipper Logistics (LSE:CLG) is my first pick. Clipper is a logistics firm that focuses primarily on the retail sector. Due to the pandemic, many retailers have had to adapt and have a stronger online presence and offering. The need for logistics and e-fulfilment services will continue to increase as online shopping habits will continue to increase too, in my opinion.
Clipper shares are one of a number of e-commerce stocks performing well on the FTSE index. As I write, shares are trading for 810p per share. This is a 39% increase in 2021 alone. When the market crashed, the share price hit a low of 149p per share in March 2020. Since then, it has risen over 440% to current levels.
In recent trading updates, Clipper reported an increase in revenue and activity as well as lucrative new contracts. In its most recent trading update for the year ended 30 April 2021, it confirmed earnings before interest and taxes to be in line with expectations of £31.6m, which is an increase of 53% of 2020 levels. Furthermore, revenue is expected to reach close to £700m, which is a 39% increase on 2020 levels. This has been achieved through organic growth and new contract wins.
I think Clipper is one of the best UK shares I could buy just now. It is experiencing burgeoning demand for its services. Furthermore, it is well placed in the e-commerce and logistics market to thrive and continue growing. It also completes acquisitions to add to its offering, which I particularly like.
My next pick is Urban Logistics (LSE:SHED). Urban is a real estate investment trust (REIT). This means it owns, operates, or finances income-producing properties. It is currently focussed on the e-commerce boom and offers warehousing space.
As I write, I can buy shares in Urban for 163p per share. This is a 13% increase year to date in 2021. It has recovered from its market crash low in March 2020 of 102p per share. I think at its current price point it is a cheap e-commerce stock compared to UK shares I have examined.
Urban released its annual report for 2020 just 10 days ago. Net rental income had increased to £12.2m, which is a 12% increase on 2019 levels. Its portfolio valuation increased by 11% as well as increasing contractual rent by over 10% to £12.5m compared to 2019. In addition to this, a dividend of 7.6p per share was declared. This is an increase of 8.6% compared to last year’s dividend.
I think Urban has performed well in a good time for e-commerce stocks. I believe this upward trajectory of performance and share price will continue too.
UK shares have risks
Urban’s main risk for me comes from its acquisitions. Property companies can overpay for assets or these assets may not deliver as expected. Property can be volatile, especially in times of economic uncertainty such as the pandemic.
Clipper’s risk is that it could be considered expensive. At current levels, it has a price-to-earnings ratio of just over 42. There is the risk that it is trading at an all-time high so any negative news could cause a sharp price drop.
Jabran Khan has no position in any shares mentioned. The Motley Fool UK has recommended Clipper Logistics. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.