There were many changes brought about by the pandemic, but the acceleration of e-commerce has been a big one and is likely to be a lasting one.

Studies are suggesting that many people who started shopping online out of necessity during the height of COVID-19 will likely continue to do so. According to eMarketer, e-commerce sales will exceed $5.5 trillion worldwide in 2022 and account for 21% of all retail sales.

There are several ways for investors to capitalize on this lasting trend, and the three e-commerce stocks featured below (two of which might surprise you) all have real potential to provide market outperformance for long-term investors. 

Person holding credit card in front of laptop.

Image source: Getty Images.

1. Amazon

Amazon (AMZN -3.06%) may be the most recognizable e-commerce stock globally -- and for good reason. In 2021, the company posted $469.8 billion in total sales. This is an increase of 22% over 2020. Despite this strong growth, the stock price is down 5.8% year to date and 16.8% from its 52-week high.

Several economic conditions in the back half of 2021 caused concern for investors and negatively affected the bottom line. First, the labor market in the U.S. was very tight. The shortage of workers prompted Amazon to pay bonuses and increase wages for many workers. The company also faced increasing costs related to COVID-19 mitigation efforts among its vast workforce. Next, rising prices related to inflation and supply chain bottlenecks crimped margins.

All told, these issues added billions in extra costs to the bottom line. The good news is twofold. First, these items are short-term headwinds that should resolve as the pandemic winds down or becomes more manageable. Next, Amazon has an ace in the hole with its growing Amazon Web Services (AWS) segment. 

AWS provides cloud services to businesses, governments, and other organizations. The segment produced $62 billion in revenue in 2021, a whopping 37% increase over 2020. It also produced $18.5 billion of the company's total $24.9 billion in operating income. AWS was a saving grace during a tough year, and its strong growth is expected to continue. Once Amazon's e-commerce business is free of the short-term headwinds, the combined company will be even more of a powerhouse, making Amazon an excellent pick for long-term investors. 

2. Target

Many people think of Target (TGT -2.54%) as a brick-and-mortar store. But these days, its traditional retail frontage doesn't tell the story of what's really going on behind the scenes. Target has been building up a vibrant online presence, which got a big boost during the pandemic. In the third quarter of 2021, total sales grew 12.7% after increasing 20.7% in Q3 of 2020. However, online sales grew 29% on top of an astounding 155% boost in Q3 2020. There are two key takeaways here. First, the company is effectively pushing its digital sales platform. Second, the increase in digital sales caused by the pandemic will be lasting. This is evidenced by the company's 29% 2021 improvement over 2020 digital numbers.

Target's 2021 results have been terrific so far (we still await the release of Q4 earnings, which are expected March 1). The company has increased top-line sales, operating income, and net income through Q3 2021. Diluted earnings per share (EPS) has risen from $5.91 through Q3 2020 to $10.87 through Q3 2021. Target is also an excellent stock to own when the market is uncertain, as it has been so far in 2022. Target pays a dividend that is exceptionally reliable in good times and bad. In fact, the company has maintained the dividend payment since October of 1967, and it has raised it annually for 50 years now, making it a Dividend King. The current per-share dividend payout is $0.90 quarterly and provides a yield of 1.70%. Target stock currently trades about 20% off its 52-week high, which may offer investors an opportunity to snag this unique retailer a discount. 

3. RH

RH (RH -1.70%), formerly Restoration Hardware, is another company that may not immediately come to mind as an e-commerce play. RH started as a cash-and-carry retailer before transforming itself into the direct-to-consumer subscription model it follows today. RH also transformed its brand into a luxury name in the home furnishing business. Orders can be placed in one of the company's tremendous galleries or online. RH stock has had quite a rocky start in 2022 and is down about 21% year-to-date. 

Despite the drop in share price, the company's results are stronger than ever. Revenue for Q3 2021 exceeded $1 billion, a 19% increase over the same period in 2020. Margins also increased, despite RH dealing with similar supply chain headaches as Amazon. GAAP operating margin through Q3 2021 was 25%, a significant improvement over the 14% posted for the same period in 2020. Because of the increase in sales and superior margins, the diluted EPS improved from $5.37 through Q3 2020 to $17.19 through Q3 2021. 

RH has ambitious expansion plans underway. In 2022, the company plans to open its first international gallery in the United Kingdom. Locations are expected to follow in France and Germany. Overall, the company believes it has a $5 billion to $6 billion market opportunity in North America and a $20 billion to $25 billion opportunity globally. RH is now trading at a price-to-earnings (P/E) ratio under 20, which is its lowest valuation in more than a year, as shown below.

RH PE Ratio Chart

RH PE Ratio data by YCharts.

RH is also a riskier play than Amazon or Target, as evidenced by the higher percentage of shares sold short. Not everyone is convinced that management can maintain impressive results and successfully expand the brand.

Investor takeaway

Each of the stocks above offers investors a chance to capture a piece of the burgeoning online commerce market. Amazon is the largest e-commerce company globally, while Target has an excellent brick-and-mortar footprint with quickly expanding digital sales. RH is a luxury brand with excellent results and ambitious plans. Each of them could reward long-term investors with market-beating returns.