Amazon.com, Inc. Stock: Holidays a Nice Gift for AMZN Investors?

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Amazon stock - Amazon.com, Inc. Stock: Holidays a Nice Gift for AMZN Investors?

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Amazon.com, Inc. (NASDAQ:AMZN) is one of the pioneers of the Internet Age, with Jeff Bezos launching the ecommerce operator in July 1994. Yet the company has continued to act like a scrappy startup. It certainly helps that Bezos has continued to focus on innovation and customer service.

Amazon Stock: Holidays a Nice Gift For AMZN Investors?

And yes, shareholders have made a bundle. Consider that — since the IPO — Amazon stock has gained a whopping 44,000%!

But when it comes to investing, the future is what counts. So is there still opportunity here for Amazon stock? Well, I think so.

Granted, Amazon stock has not necessarily had a standout performance for the year so far. The gain is about 13%.

But this may change soon. For example, Bernstein’s Carlos Kirjner just put out a research note indicating that there will be an acceleration in the top-line in the coming months (this is based on the latest quarterly results from AMZN). For Q4, the call is for revenues to hit $45.1 billion, which would be a 26% year-over-year gain.

As should be no surprise, a key driver is likely to be the continued traction in the cloud business. Kirjner predicts sizzling 51% increase in revenues to $3.6 billion.

Oh, and he has maintained his aggressive price target on AMZN stock at about $1,000, which implies about 31% potential upside for investors.

Wider Bullishness on Amazon Stock

But Kirjner is certainly not the only bull. Analysts at JPMorgan Chase & Co. have a $915 price target on Amazon stock and both Susquehanna and Deutsche Bank have it at $900.

Then again, the company has multiple levers to propel growth. Besides the cloud business, there are other segments like streaming video and music, as well as devices like the Kindle, Echo and Dash buttons. All these allow for enormous market opportunities that can move the needle for AMZN stock.

Although, the bulk of the business for the company is still ecommerce. And the good news is that there is lots of room for growth. According to research from Forrester, the market in the U.S. is forecasted to jump from $334 billion in 2015 to $480 billion by 2019. This represents the tidal shift in consumer habits that has adversely impacted many brick-and-mortar retailers like Wal-Mart Stores, Inc. (NYSE:WMT) and Macy’s, Inc. (NYSE:M).

OK, the big knock against Amazon stock is the valuation, which is definitely far from cheap. Keep in mind that the forward price-to-earnings ratio is at 74X! However, it is important to note that Wall Street will generally pay a premium for sustained top-line growth, especially when a company is a dominant player in markets that have tremendous long-term potential.

After all, this is what happened with companies like Microsoft Corporation (NASDAQ:MSFT), which rewarded shareholders for many years.

Now with Amazon stock, there should also be near-term momentum because of the upcoming holiday season. According to a recent report from eMarketer, about 42.7% of internet users are already thinking about having the ecommerce giant as the primary source for holiday shopping (the main reason is the “ease of use” of the site and app).

In other words, the dog days of August may be a good point to pick up some AMZN stock.

Tom Taulli runs the InvestorPlace blog IPO Playbook. He is also the author of High-Profit IPO StrategiesAll About Commodities and All About Short Selling. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.

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Tom Taulli is the author of various books. They include Artificial Intelligence Basics and the Robotic Process Automation Handbook. His upcoming book is called Generative AI: How ChatGPT and other AI Tools Will Revolutionize Business.


Article printed from InvestorPlace Media, https://investorplace.com/2016/08/amazon-stock-holidays-amzn/.

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