AMZN Stock Has Potential … I Guess
By Kyle Woodley
InvestorPlace Deputy Managing Editor
At the beginning of this year, I came out with a fairly skeptical viewpoint toward Amazon (AMZN). My biggest beef with AMZN stock was that it always has traded in the science fiction section rather than nonfiction. So, I said I wouldn’t bet against Amazon, but I wouldn’t bet on it, either.
I was wrong and I was right. AMZN stock has improved 40% since then, making my final call a poor one. But, like I said, it did so on iffy substance, including two losses (one a surprise) in its past two earnings reports.
Nonetheless, I think Amazon has finally stuck its claws into enough promising long-term projects that I’m finally willing to believe enough of them will pan out and justify everyone’s faith in the company. The initiative that really turned me is Amazon Pantry. James Brumley puts together an excellent analysis here, so I won’t dawdle on it much, but AMZN plans on taking the likes of Costco (COST) with a bulk delivery service of basic consumer goods.
American society is increasingly considering the basic act of going out and shopping beneath it. And while there’s something to be said about picking your own produce, I’ve yet to see anyone pull off the in-store “squeeze” test on a roll of Charmin or smell a bottle of Liquid-Plumbr for freshness. So to me, bulk goods delivery is a wide-open door for Amazon Pantry to charge through.
Combine that with Amazon’s right-in-the-pocket bet on cloud services, as well as the potential of Amazon Prime given our migration toward Internet TV viewing, and AMZN stock just has too many weapons to count it out.
I still fear the day where the whole world wakes up to Amazon’s absurd valuation, so I’d still suggest being sensible about stop-losses. But AMZN stock has my begrudging vote.
As of this writing, Jeff Reeves and Kyle Woodley were long TSLA.