Amazon.com, Inc. (AMZN) has become so diversified and so much more than an e-commerce brand that it’s hard to wrap your head around. Yet CEO and founder Jeff Bezos does that and still finds the time to run a rocket company in his off hours.
With a market cap of $332 billion, this is far more than a bookseller or e-commerce flagship.
It is a leader in cloud computing. It has become a major publisher and created a platform for individuals to self-publish (which, of course, adds more content to their books division). It is building up a solid streaming video library with award-winning original content. It has developed one of the first voice interactive ‘assistants’, the next generation of computer interface.
And just recently, it opened up its third brick and mortar store in Portland, OR. This may seem counter-intuitive when retailers like Target Corporation (TGT), Wal-Mart Stores, Inc. (WMT) and Sears Holdings Corp (SHLD) are closing stores to stay in business.
What Gives AMZN Long-Term Strength?
But for Amazon, being counter-intuitive is precisely what brought this firm to the dance. In its pilot stores, it sells all its products — books, Kindles, Fire, etc. There are displays where you can interact with products that have only been sold over the internet, since AMZN pulled its deal with other retailers to sell its products.
People can now ‘experience’ Amazon on a tactile level. It has worked for Apple Inc. (AAPL) and it will likely work for AMZN. It’s not likely you will ever see Amazon brick and mortar stocks hit triple digits, but there will certainly be representation in major cities across the U.S.
For one thing, these stores become distribution hubs in densely populated areas. For another, readers are still interested in walking the stacks and browsing before landing on ‘the perfect book’.
But AMZN isn’t ignoring any of its other business ventures in the meantime. Amazon Web Services has been a major engine of growth in the last year and that growth will certainly continue. AWS was built out of Amazon’s massive computer support system.
To maintain all the information and logistics necessary to run its e-commerce business, AMZN built gigantic server farms. A stunning amount of excess capacity was being unused, so AWS became a cloud storage business from the extra capacity. According to Bidness.net, AWS has posted a 68% average net sales growth in the previous five quarters.
AMZN is also starting to build out in India, which is a much better market to enter and gain traction on a large scale than China at this point. Alibaba Group Holding Ltd (BABA) has a grip on China and the Chinese prefer a local firm to a foreign one for their e-commerce.
In the last 3 months, Amazon stock is up 26% after getting hammered in 2015 and early 2016. There’s a lot of long-term awesomeness here.
Louis Navellier is a renowned growth investor. He is the editor of five investing newsletters: Blue Chip Growth, Emerging Growth, Ultimate Growth, Family Trust and Platinum Growth. His most popular service, Blue Chip Growth, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, PortfolioGrader.com. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.
