Due to the pandemic, e-commerce companies experienced the most significant tailwind in their history in 2020 and 2021. Now these companies are facing difficult comparisons and a weakening consumer environment that could affect their financial results. In July many companies will report their second-quarter results, but I've got my eye on two in particular: Amazon (AMZN -0.36%) and MercadoLibre (MELI -3.27%). Read on to find out why I'm intrigued by their upcoming results.

Amazon

In the e-commerce world, there's no one bigger than Amazon. The stalwart has long dominated online shopping, but had a tough quarter when investors last heard from it. In Q1, Amazon burned $18.6 billion in cash while sales only rose 7%. Its e-commerce divisions spearheaded these poor results.

Division Sales Growth Operating Margin
North America Commerce 8% (2.3%)
International Commerce (6%) (4.5%)

Source: Amazon.

With both divisions losing money and posting unremarkable growth, Amazon's e-commerce growth may be in its final stages. Couple that with rising inflation squeezing consumers, and this quarter could be difficult for Amazon.

The lone bright spot in Q1 was Amazon Web Services (AWS), which reported sales growth of 37% YOY (year-over-year) and an impressive 35% operating margin. Regardless of how the economy is doing, the move toward the cloud is practically unstoppable. A few sources peg the cloud computing market opportunity at around $1.6 trillion by 2030. With a 36% market share, Amazon could have a $576 billion annual revenue stream, compared to the $67.1 billion it reported in Q1 -- if it maintains its lead.

There's no reason to expect anything but solid results from AWS during Q2, and I believe this catalyst is the best reason to purchase Amazon's stock.

When it reports Q2 results, many analysts will use Amazon's results as a bellwether for the consumer environment in general. These results could spur investor sentiment for the next quarter, making it a must-read report. I'll be watching Amazon closely when it reports results -- likely in late July.

In the meantime, investors can scoop Amazon up for around 2.4 times sales, the lowest it has traded since 2016. However, if you're interested in Amazon stock, I'd advise patience -- a bad Q2 report could drop the stock. But if you've got a long-term mindset (meaning a three-to-five-year holding period), then Amazon stock presents a decent value at this price.

MercadoLibre

Speaking of valuation, MercadoLibre is one of the lowest-valued stocks in the market today. While there may be a few one-off cases, I challenge you to find a growth stock that trades for the same valuation it traded for during the Great Recession in 2009.

MELI PS Ratio Chart

MELI PS Ratio data by YCharts

You'd likely think MercadoLibre's business is in trouble with just that information.

But it isn't.

The Latin American e-commerce giant provides its clientele with an online marketplace, digital payments, credit solutions, and shipping logistics. During Q1, revenue rose 67% YOY to $2.2 billion, with fintech leading the way with 113% growth to $971 million. Fintech growth was spurred on by its take rate rising from 3.19% in 2021's Q1 to 3.84% in 2022. Its commerce take rate also rose from 15% to 16.7%, with shipping revenue and first-party product sales adding the most growth.

These take-rate expansions indicate MercadoLibre has excellent pricing power, and its investments in credit and shipping are starting to pay off.

MercadoLibre also posted a 2.9% net income margin, up from a 2.5% loss last year. So with many positives going on with MeradoLibre's business, why is the stock getting sold off?

This unwarranted pessimism makes it one of my top e-commerce stocks to watch this quarter. While a weakening consumer isn't good for MercadoLibre, e-commerce deployment is still in its infancy in Latin America. Additionally, investors aren't too keen on growth stocks, and are dumping these stocks in favor of businesses that produce strong cash flows.

I believe MercadoLibre is at a tipping point, and could become a cash flow machine within the next few years. July could be when MeracdoLibre reverts to its normal valuation range, implying a nearly 100% upside if it returns to even the low end of its typical valuation (eight times sales). I don't know if it will happen or not in July, but MercadoLibre seems poised to pop if it reports any good news.

I'll be watching both Amazon and MercadoLibre closely this month. Both companies could have wild stock price swings in either direction, but investors must dig deep to understand why the movements are occurring.