I’ve said it before, and I’ll say it again: Amazon.com, Inc. (NASDAQ:AMZN) will take over the world. While the general public obsesses over bad hair and the color orange, I think we face a bigger threat. Amazon’s drones and their uncanny way of doing business will fundamentally alter commerce as we know it. Note that I didn’t say “e-commerce.” When you dominate as much as AMZN stock has, your industry no longer requires a qualifying prefix.
If you ever encounter an issue using Amazon, the company will take care of you promptly. Should you need immediate, on the spot assistance, AMZN will take you to a special menu screen. From there, you enter your phone number, and literally within seconds, you will be directed to a company representative.
We all know firsthand how frustrating most customer service experiences are. I wouldn’t be surprised if some companies deliberately promote poor service just so you won’t call them. This of course is just another reason why Amazon stock is so special. They could rest on their laurels. They could kick back and relax, knowing that their status as king is unchallenged. Yet they still have the same hunger that they did back in the late 1990s.
Maybe that’s why AMZN stock is one of the greatest investments in history, while generational internet peers Netscape and Lycos are history.
AMZN Stock Teeing Up for An Explosive 2017
I can go on a full-blown rant listing all the reasons why every investor should at least consider Amazon stock, but a recent development in the markets really solidified the bullish argument. As you know, AMZN stock didn’t do so well when Donald Trump won the general election on Nov. 8. Within a few days, shares had fallen by as much as 9%. This is understandable considering the bitter and contentious political campaign season.
Even by the end of 2016, AMZN stock was conspicuously lower than its pre-election result close. However, that changed dramatically at the start of the new year. Amazon stock gained some much-needed traction, and shot above the $800-mark. Since breaching that psychological barrier, AMZN has yet to fall back below it. And for January, Amazon saw a robust 9% return.
This is important because January is typically not a good time for Amazon stock. Of all the opening months going back to 1998, shares average an extremely pedestrian 0.6%. However, annual returns from 1998 through 2016 average 84%.
Such huge discrepancies made me wonder — are there indicators in January that predict how AMZN stock will do later?
The answer is a resounding yes.
This past January’s performance for AMZN stock was the fourth best overall. Of the three other times that Amazon stock posted better opening months, investors later saw average annual returns of 120%. Inclusive of every positive January, AMZN still nets an amazing average annual return of 100%.
That’s not all. Of the seven years in which Amazon took a loss, six had Januarys that also incurred red ink. The one exception occurred in 2001, during the immediate aftermath of the tech bubble bursting. As long as January holds up, it’s highly unlikely to be on the losing end.
Amazon’s Fundamentals Look Great Too!
I don’t recommend making a decision on an opportunity on the basis of a sole metric or indicator. The same can be said about statistical data. Even the best-reasoned and logical calculations can’t account for every variable. Just like the election of President Trump, there are certain elements of unpredictability that can and will bite you.
However, with AMZN stock, I think investors have a little more buffer to play with thanks to its solid fundamentals. Primarily, Amazon is still innovating. We saw a bit of that during the Super Bowl commercial featuring Amazon Prime Air. It’s also a dominant player in cloud computing, frustrating companies like Microsoft Corporation (NASDAQ:MSFT), SAP SE (ADR) (NYSE:SAP), International Business Machines Corp. (NYSE:IBM) and Oracle Corporation (NYSE:ORCL).
And while I acknowledge it’s risky for AMZN stock if it doesn’t work out, I like Amazon’s venture into groceries. Granted, I’m not crazy on possible rumors that the company is thinking about rolling out 2,000 stores. But if they do this right — particularly in trendy places like their Seattle hometown — AMZN could have another winner on its hands.
These underlying drivers provide the confidence for investors willing to bet that Amazon stock will hit quadruple digits. However, what can’t be denied is the momentum. When AMZN gets hot, it almost always stays hot. For many, that will be the nudge they need to make their final decision.
As of this writing, Josh Enomoto did not hold a position in any of the aforementioned securities.