The e-commerce sector has been a rollercoaster over the past few years, thanks to the ripples created by the pandemic. Many former high-flying stocks now sit at depressed levels after the temporary Covid-19 boom ended and more normal growth resumed. This cooldown may have made it seem like the potential of this sector had been overhyped.

However, I think the cooldown was simply an adjustment to more sustainable long-term trends, not a sign that e-commerce is fading. My conviction on stocks like Shopify (NYSE:SHOP), which I recommended in mid-2022 when sentiment was still very negative, has already paid off as the recovery narrative takes hold. I believe other unjustly punished e-commerce stocks will also come back stronger. Let’s take a look at these under-loved e-commerce stocks ready to rebound higher!

Sea Inc (SE)

When it comes to long-term upside potential, Sea Limited (NYSE:SE) remains one of my highest conviction picks, even after its massive selloff. This Singapore-based company operates three fast-growing businesses – Garena, Shopee e-commerce, and SeaMoney fintech.

While growth has decelerated recently, Sea’s fundamentals remain strong for multi-year outperformance. The region it operates in Southeast Asia offers a massive runway for further penetration – both in gaming and online shopping. As middle-class incomes rise in Asia, Sea is poised to capitalize on swelling demand.

Garena’s games, like League of Legends and FIFA Online 3, already have tremendous user bases. Meanwhile, Shopee is cementing itself as a top e-commerce destination across Southeast Asia. With growth in the region expected to continue outpacing developed markets, Sea’s leading market positioning leaves the company with ample room for expansion.

Sea does not have the best margins currently, and near-term headwinds may persist. However, with analysts’ earnings per share growth estimates coming in at more than 100% from 2023 to 2025, and its forward price-earnings ratio sitting at just 15-times based on 2025 EPS, SE stock offers compelling long-term value.

JD.com (JD)

JD.com (NASDAQ:JD) has been lumped in with the broader selloff across Chinese equities amid concerns over geopolitics and growth in this region. However, with shares now trading at just 8-times forward earnings and 0.25-times sales, JD stock offers one of the best risk/reward setups in global e-commerce.

While China’s economy has shown weakness recently, growth still remains far stronger than developed markets at a nearly 5.2% annual run rate. China also holds tremendous foreign reserves and runs large trade surpluses, offering potential stability.

Sentiment has sunk tremendously low for JD stock as regulators continue to crack down on Chinese tech names. But with officials now moving to support stocks and e-commerce, conditions may soon improve. A proposed stimulus package worth $278 billion could help lend support.

Meanwhile, China’s massive population and rising middle class will continue fueling immense e-commerce growth this decade. China’s online retail market is forecast to expand at a 10% compounded annual growth rate (CAGR) through 2028 – far faster than other major economies. JD holds a commanding presence here as the #2 player behind Alibaba (NYSE:BABA). Thus, this stock’s upside could be substantial if sentiment stabilizes and growth reaccelerates.

Chewy (CHWY)

Unlike other picks, Chewy (NYSE:CHWY) has struggled mightily since going public, with losses continuing to provide a big drag on its balance sheet. But with spending on pets booming, especially among younger consumers, this leading online pet retailer will likely deliver big returns for patient investors.

Chewy has continued to expand its wide assortment of pet products, including food, medications, and toys, while leveraging its customer-centric approach. The company’s auto-ship offerings also drive recurring revenue.

Despite economic uncertainty, the outlook for pet spending appears strong. Surveys show Gen Z consumers actually prefer pets over having children. These younger generations are also significantly more likely to shop online than older consumers.

Chewy is not solidly profitable, but is making substantial progress. Analysts now forecast the company’s earnings per share to swing to 57 cents in fiscal 2024 and surge to $1.83 by 2029 as scale drives margins. Valuations look attractive at 0.66-times forward sales for a name expanding at mid-to-high single-digit clips.

Owning pets is increasingly popular, and online retail penetration still has ample runway. For investors taking a long view, Chewy’s leadership position makes it a prime stock to ride these demographic tailwinds higher.

On the date of publication, Omor Ibne Ehsan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Omor Ibne Ehsan is a writer at InvestorPlace. He is a self-taught investor with a focus on growth and cyclical stocks that have strong fundamentals, value, and long-term potential. He also has an interest in high-risk, high-reward investments such as cryptocurrencies and penny stocks. You can follow him on LinkedIn.

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