Amazon.com (AMZN) is a smash hit in 2015, up 70% year-to-date with no signs of slowing down.
Part of that is because AMZN stock has recently started to deliver real profits, and part of that is simply because of the cult of Amazon and its innovative CEO Jeff Bezos.
But it’s also noteworthy that many initiatives at the tech giant are gathering momentum in an effort to take the pressure off e-commerce going forward.
Yes, selling flat-screen TVs and the like on Amazon.com remains the bread and butter of its biz. But investors increasingly have other reasons to buy AMZN stock beyond e-commerce.
Here are five of them:
Robotics: Amazon doesn’t get a lot of press for its robotics biz, mostly because these sophisticated devices are just part of the logistics chain and warehousing needs of AMZN. However, they make Amazon.com agile enough to fill orders quickly and help keep labor costs down. There’s talk of drone delivery, which remains a big deal for AMZN stock and shipping plans in the long term, but right now, automation is making a material impact on Amazon’s margins.
Amazon Web Services: This arm of AMZN stock has been getting a lot of press since details were finally revealed earlier this year. As InvestorPlace’s John Divine notes, in recent Amazon earnings, “AWS was just 7.9% of the company’s total revenue, but its operating income of $391 million was a remarkable 36.4% of AMZN’s total operating income of $1.08 billion.” It’s also growing fast, plotting over $6 billion in revenue this year and growing at a roughly 50% rate annually right now.
Amazon Home Services: Amazon has expanded its “handyman service” to 11 test cities, where users can connect with plumbers, movers and more to spruce up their homes. This takes the fight squarely to rivals like Yelp (YELP) and Angie’s List (ANGI) that strive for the same referral services.
Prime: For starters, the regular revenue from Amazn Prime customers is a huge foundation for Amazon.com in the long-term — much like the membership revenue of Costco (COST). On top of that, the ability to lean on these customers to juice sales via events like Prime Day can’t be understated. Yes, it may have been a commercialized ploy to juice revenue, but Amazon’s Prime Day e-commerce extravaganza was also a huge hit for AMZN stock by all reports and prompted a decent pop for AMZN stock as a result.
Kindle, Echo, Fire Stick, Etc.: Though not a hardware powerhouse like Apple (AAPL), Amazon is indeed holding its own when it comes to consumer gadgets. The Kindle and Kindle Fire are incredibly popular as e-readers even if they aren’t iPad killers, the Fire Stick and Fire TV gadgets are popular as ways to get streaming video to Amazon Prime customers, and the under-the-radar Echo voice-activated hub is proof positive that AMZN stock is still innovating. Maybe none of these products are profit drivers alone, but they do foster brand loyalty and keep consumers firmly in the Amazon.com ecosystem.
Jeff Reeves is the editor of InvestorPlace.com and the author of The Frugal Investor’s Guide to Finding Great Stocks. As of this writing, he did not hold a position in any of the aforementioned securities. Write him at email@example.com or follow him on Twitter via @JeffReevesIP.
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