Editor’s note: This column is part of our Best Stocks for 2017 contest. The public pick for the contest is Amazon.com, Inc. (NASDAQ:AMZN).
Amazon.com, Inc. (NASDAQ:AMZN) made it into the Best Stocks of 2017 contest as a readers’ choice, and so far, it seems to be holding its own. AMZN stock’s gain of roughly 19% places it in third in the contest after the first quarter.
And that’s despite a lengthy sideways trawl that started in late February. Between Feb. 21 and Mar. 27, Amazon stock has gained just 0.2%.
As always, AMZN is keeping its fingers in a number of pies. Grocery? Check, including in India, where it allegedly wants to put $500 million into a new program.
Brick-and-mortar retail? Amazon put the rollout of its new Amazon Go stores on hold as some problems have cropped up with the technology when too many people are in the store at once. But they’re still working on it, and isn’t that what testing is for? To find the flaws and make the system stronger? It’s hard to deny the appeal of a no-checkout store concept in this want-it-now world.
And then you have all the tried-and-true bright spots with AMZN stock — the gargantuan retail presence, Amazon Web Services and the leadership and innovation of CEO Jeff Bezos — it’s certainly nothing to sneeze at.
Overall, it’s not only easy to see why Amazon stock was the readers’ choice for this contest, but it’s also easy to believe it could keep rewarding those who took a chance on it.
AMZN Stock Still Recovering From Earnings
Earnings was really a big millstone for AMZN stock. After running up over 12% leading up to the earnings report, the stock dropped 4% after releasing the numbers. Earnings-per-share hit $1.54, 14 cents higher than estimates, but revenue was soft at $43.74 billion, compared to expectations for $44.84 billion.
Even the AWS numbers — a darling for bulls lately — disappointed. While it managed sales growth of 47% to $3.54 billion, expectations were for $3.61 billion. Guidance was also light, with operating income aiming for between $250 million and $900 million vs. $1.1 billion a year prior and Street expectations in the neighborhood of $1.3 billion. They also now see net sales in a range of $33.25 billion to $35.75 billion compared to the expected $36 billion.
No wonder the AMZN stock price took a dive.
But consider that despite this — despite missing on a number of vital metrics and spending a third of Q1 running in circles — this stock was still up 19% in the first quarter. As InvestorPlace.com’s own James Brumley recently said, it truly seems “there’s never really a bad time to buy Amazon.”
So, despite the earnings and guidance, and taking into account that AMZN stock remains far from cheap (its price-to-earnings ratio is running about 183), it might not be wise to bet against a machine like Amazon.
As of this writing, Jessica Loder did not hold a position in any of the aforementioned securities.
