2 E-Commerce Focused Stocks About To Rally Investors can expect these trends to act as significant tailwinds for earnings in future quarters and the astute investor will be zeroing in on which...

Recent earnings reports for the second quarter of the year are showing a consistent trend among retailers. Margins are widening, consumer spending is close to highs, and most companies are getting better and better at growing their e-commerce channels.

Investors can expect these trends to act as significant tailwinds for earnings in future quarters and the astute investor will be zeroing in on which companies are firing on all cylinders. Here are two to keep on your watchlist.

Best Buy (NYSE: BBY)

Shares of Best Buy saw their heaviest trading since 2019 this week after the company reported their Q2 earnings before the start of Tuesday's session. Revenue was up 20% on the year and comfortably ahead of what analysts had been expecting, as was the company's bottom line EPS. As well as smashing the consensus, management also raised their forward guidance for full-year performance, one of the most bullish signals they can give to investors.

In a note with Tuesday's release CFO Matt Bilunas said that "based on the strength of the business and our expectations for continued customer demand as we lap the strong comparable sales growth from the second half of last year, we are raising our outlook for the year. For the second half of FY22, we expect our comparable sales to be in the range of flat to down 3% versus last year, compared to our previous annual outlook that implied a high single-digit decline."

Bank of America, Jefferies, and Wells Fargo were among those who were quickly out with bullish comments on Best Buy stock, all either reiterating a Buy rating or moving it to a Buy on the back of how well Best Buy's online sales performed. Bank of America went so far as to boost their price target to $157, which suggests there's an upside of close to 30% to be had from where shares closed on Wednesday.

Those same Best Buy shares have already jumped as much as 11% in the aftermath of the report and the upgrades and were on track to trend up again in Thursday's pre-market session. They've traded in a fairly narrow range since this time last year but are sitting on the verge of all-time highs. If they can close above the $125 level they should be in the clear to motor on into blue sky territory for the first time in 2021.

Dick's Sporting Goods (NYSE: DKS)

The 13% jump seen in shares of Dick's Sporting Goods yesterday should tell you everything you need to know about their latest earnings. A 20% jump in revenue compared to the same period last year was one of the main instigators in the pop but there was a lot more to like about this report. GAAP EPS was more than 70% higher than what analysts had been expecting.

Though e-commerce sales were down compared to Q2 2020, they were still more than double those reported in Q2 2019. It might be years before some of these retailers match the growth numbers they hit last year, but that doesn't mean there aren't a ton of positives to take from most of those gains being held onto. Dick's management, like their peers in Best Buy, saw fit to raise forward guidance and increase their dividend. They also increased their share repurchase program, signaling to Wall Street that they believe shares are very much undervalued at current prices.

With Wednesday's jump, Dick's shares are now up more than 900% since their decade low, hit shortly after the onset of the pandemic last year. Investors thinking about getting involved would be buying into a company that has been completely reinvented and has turned itself into a true 21st-century retailer.

Many well-known mall names are struggling to maintain the growth they reported last year as the consumer shift to online shopping becomes more and more permanent. It's already starting to become clear which companies have figured out how to capitalize on this, and which haven't. Dick's, and Best Buy, are firmly in the former camp and investors should expect the shares of each to kick on from current levels in the coming weeks.