4 Tech Stocks Dominate UBS E-Commerce Theme List

By Lee Jackson Published Feb 26, 8:20AM EST

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The number of people who have never bought something on the Internet is quickly dwindling. The speed, ease and, most importantly, the safety of purchases online have transformed retail commerce in the United States and around the world. While brick-and-mortar companies are more and more involved, it is technology stocks that kicked the shopping phenomena into high gear.

A recent report from UBS highlights the 10 stocks that make up the firm’s e-commerce theme list. They also removed American Express Co. (NYSE: AXP) was removed from the list of companies that make the grade. Here we focus on the four large-cap technology names the company feels are dominant in the silo.

Akamai Technologies Inc. (NASDAQ: AKAM) is one of the leading providers of cloud services for delivering, optimizing and securing online content and business applications. About half of Akamai’s revenues are from media delivery (delivery of content over the Internet using the company’s 135,000 server global edge network and software), for which demand is driven by video delivery and software downloads. Akamai is the leading provider of website optimization and acceleration services to e-commerce companies– a key reason for making the UBS list.

The UBS price target for the stock, which is rated Buy, is $74. The Thomson/First Call consensus price target is $72.39. The stock ended Wednesday’s trading session at $69.45.

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Amazon.com Inc. (NASDAQ: AMZN) is the king of the e-commerce world, and it finally appears the company has refocused on the core businesses that got it to the top. Many Wall Street analysts view Amazon as the innovation leader and a top stock to own for 2015 and beyond. In addition to its online retailing muscle, the company has a gigantic cloud storage business that continues to dominate rivals. In fact, Amazon recently announced that it will start announcing Amazon Web Services results separately starting in the first quarter of this year. This was broadly cheered by investors, as many tech firms do not clearly reveal their cloud computing revenues.

The UBS rates the stock at Market Perform with a $355 price target. That is way below the consensus target of $390.17. Shares closed Wednesday at $385.37.

Apple Inc. (NASDAQ: AAPL) was reinitiated with an Outperform rating at UBS in January, and it has been rampaging every price target in its sights since. The company absolutely crushed earnings estimates back in January, and it is firing on all cylinders. With huge sales of both iPhone 6 models, the iconic Silicon Valley firm has traded in spectacular fashion since. The UBS analysts say flat out, since the first introduction of the iPhone, the company has transformed the world of mobility and totally re-morphed as a company. They point to what remains a very strong product cycle story and basically call Apple the best in class technology story. Apple Pay appears to be off to a solid start and also likely will generate its own, high-margin revenue stream and be a source of solid recurring revenue, a key e-commerce point. With a huge $145 billion stockpile of cash, the UBS analysts expect new capital allocations strategies and view Apple Pay as a new source of solid recurring revenue.

Apple investors are paid a 1.45% dividend. The UBS price target is $133. The consensus target is higher at $134.61. The shares closed at $128.79.

eBay Inc. (NASDAQ: EBAY) is continuing improvements in the user experience, which is helping the company to keep pace with upstart rivals. eBay’s marketplaces keep attracting new users, evidenced by double-digit growth in active users and items sold. Many Wall Street analysts team feel the company has a decided advantage in cross-border shipping of product, something that many other retailers struggle with. While many are focused on the PayPal spin-out scheduled for later this year, better-than-expected fourth-quarter results reinforced the positive view that the eBay is on target to unlock the value of its faster-growing PayPal business, and possibly its enterprise business.

The UBS price target for the Buy-rated stock is $62, and the consensus target is $58.77. The stock closed on Wednesday at $58.35 a share.

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E-commerce growth is going to continue, and focusing on stocks that are a big part of it makes sense. Obviously, all four of these companies have many other products and revenue streams, and that makes them a solid long-term buy for aggressive growth accounts.

About the Author Lee Jackson →

Lee Jackson has covered Wall Street analysts' equity and debt research and equity strategy daily for 24/7 Wall St. since 2012. His broad and diverse career, which included a stint as the creative services director at the NBC affiliate in Austin, Texas, gives him unique insight into the financial industry and world.

Lee Jackson's journey in the financial industry spans over 30 years, with nearly two decades as an institutional equity salesperson at Bear Stearns, Lehman Brothers, and Morgan Stanley. His career was marked by his presence on the sell side during pivotal Wall Street events, from the dot.com rise and bubble to the Long Term Capital Management debacle, 9/11, and the Great Recession of 2008. This is a testament to his resilience and adaptability in the face of market volatility.

Lee Jackson’s practical financial industry experience, acquired from a career at some of the biggest banks and brokerage firms, is complemented by a lifetime of writing on various platforms. This unique combination allows him to shed light on the intricacies and workings of Wall Street in a way that only someone with deep insider experience and knowledge can. Moreover, his extensive network across Wall Street continues to provide direct access for him and 24/7 Wall St., a privilege few firms enjoy.

Since 2012, Jackson’s work for 24/7 Wall St. has been featured in Barron’s, Yahoo Finance, MarketWatch, Business Insider, TradingView, Real Money, The Street, Seeking Alpha, Benzinga, and other media outlets. He attended the prestigious Cranbrook Schools in Bloomfield Hills, Michigan, and has a degree in broadcasting from the Specs Howard School of Media Arts.