It’s a strange time to be in the markets. Although the Dow Jones Industrial Average has been on a four-session winning streak, it’s just 2% above parity for the year. I foresee nearer-term troubles for a majority of companies. However, the one name that could ride the storm unscathed is Amazon.com, Inc. (NASDAQ:AMZN). Quite simply, AMZN stock is a beast.
Just take a cursory look at the table.
Year-to-date, Amazon stock is up an astonishing 24%. Its closest competitors in the retail sector include Best Buy Co Inc (NYSE:BBY) and Walmart Inc (NYSE:WMT). Both are putting up solid numbers — up 7% for BBY, and 5% for WMT. However, neither company can hold a candle to the AMZN monster.
It’s a somewhat similar story in the media sector. Alphabet Inc (NASDAQ:GOOG, NASDAQ:GOOGL) is struggling to gain traction, having only put up less than 2% since its January opener. Netflix, Inc. (NASDAQ:NFLX) is one of few companies giving Amazon a run for its money with a 38.6% walloping. However, if I had to pick between the two, I’d give the edge to AMZN stock for its diversified businesses.
Of course, less than two months of trading action doesn’t tell us much. Should the broader markets fail to build on their momentum substantively, we could see more ugliness. Yet even in a potential downturn, Amazon stock should hold up better than the rest for three reasons.
AMZN Focused on the Bigger Picture
You can make the argument that from the very beginning, Amazon was focused on the bigger picture. CEO Jeff Bezos knew that with the advent of the internet, e-commerce was the future of retail. Despite early criticisms, Amazon pushed ahead with its web-centric business strategy, and the world has never been the same since.
What’s especially endearing for those holding AMZN stock is that management has never lost its visionary focus. Case in point is the recent news that Amazon partnered with Bank of America Corp (NYSE:BAC) for its merchant-lending program. Launched in 2011, Amazon Lending is an invite-only lending platform that provides small businesses with loans that they couldn’t get through traditional channels.
In recent years, the company has scaled back on the program to assess credit risks associated with the lending industry. However, with Bank of America on board, we could see Amazon reassert itself aggressively.
More importantly, this move demonstrates that AMZN is very much attuned to business trends. As the rise of cryptocurrencies will tell you, financial transactions are increasingly non-traditional. I love how the e-commerce giant always keeps itself relevant, which is a big plus for Amazon stock.
Ruthlessness Benefits Amazon Stock
Most people regard ruthlessness in a negative light. However, when it comes to investing in a publicly traded company, you want your choice organization to have killer instinct. Amazon has that in spades, which pleases AMZN stock investors to no end.
Everything management does has a purpose. But let’s be real here — the omnipresent organization has plenty of safety margin should events go awry. In other words, whether it enters a new market because of a well-planned strategy, or because it just wants to, we the public can’t tell the difference.
For example, Amazon controversially bought out Whole Foods Market. In the aftermath, the buyout significantly hurt traditional grocery stores. The stated purpose was for AMZN to bolster its Amazon Go stores, which feature automated check-out lanes. But with industry margins so razor-thin, I question why they would need to do this other than because they can!
This e-commerce juggernaut has the luxury to do what it wants, and they’re taking advantage of it. That’s another reason why I give the edge to Amazon stock compared to NFLX. Netflix has one core business to focus on. Amazon has so many avenues it can pursue, it’s bordering on the ridiculous.
Inarguable Technical Strength of AMZN Stock
We can argue over Amazon data and statistics until we’re blue in the face. At the end of the day, it comes down to whether investors are willing to buy AMZN stock, and without any doubt, the answer is a resounding yes.
To me, it seems like just yesterday that Amazon stock broke the key, psychological $1,000 level. However, as our own James Brumley pointed out, big, round numbers are anathema to hot-rod investments. Big-number psychology negatively impacted Alphabet shares on its run to $1,000. It even killed mighty bitcoin at $20,000.
The same thing happened to AMZN. The difference is that Amazon recovered robustly, and now, it doesn’t seem like it will ever go back. Compared to that psychological level that got traders hot and bothered, AMZN is up 45%.
You just cannot argue with this kind of performance. Considering all its tailwinds, if AMZN stock does dip, use it as a buying opportunity.
As of this writing, Josh Enomoto is long bitcoin.