At $1,752, Amazon (NASDAQ:AMZN) stock is still cheap.
The last time I wrote about AMZN stock, I said it it should be bought on the dip to $1,770, adding, “with the holiday shopping season rush nearing, AMZN stock is one to own now.”
Shortly after that, Amazon stock price rocketed to $1,815 before pulling back to its current price.
As AMZN stock bounces off its support, I still believe it’s a strong buy during the holidays, especially with total U.S. holiday sales expected to reach $1 trillion for the first time.
Buy AMZN Stock on Weakness and Let it Rip
eMarketer says total U.S. holiday retail sales will rise nearly 4% to $1.0078 trillion in 2019. E-commerce sales will climb just over 13% to $135.35 billion, the firm predicted. “Holiday spending growth will be driven by a consumer economy that remains robust, due to low unemployment, rising wages, a strong stock market and healthy consumer confidence,” eMarketer principal analyst Andrew Lipsman said.
Better yet, mobile commerce, or m-commerce, will grow meaningfully, too. In fact, eMarketer says it could increase 25% year-over-year and represent 47.5% of holiday e-commerce sales this year. That’s another big plus for Amazon stock, since AMZN owns the mobile space.
As InvestorPlace contributor Chris Markoch noted:
“Savvy online retailers know that 55% of their traffic (and sales) come from smartphones. An eMarketer study shows that by the end of 2019, people will spend more time in front of their smartphones than they do watching television.”
Don’t Worry Too Much About Amazon’s Guidance Miss
Granted, AMZN disappointed investors by providing fourth-quarter revenue guidance of $80 billion to $85 billion. That was below analysts’ average estimate of $87.4 billion and raises concerns about the company’s holiday season performance.
But let’s not get bent out of shape over it.
“They’ve always given pretty conservative guidance, so our belief is that they’ll surpass what they… say,” Jefferies analyst Brent Thill stated.
Plus, as I’ve noted in the past, there’s no shortage of analysts who are bullish on AMZN stock.
UBS still has a “buy” rating on the shares. Guggenheim recommends using pullbacks by Amazon stock as buying opportunities. And JP Morgan analyst Doug Anmuth said: “We’ll take the trade-off of lighter profits for higher revenue—Amazon’s earned it. We’re buying the pullback.”
The Bottom Line on AMZN Stock
AMZN is a strong buy on dips. Its soft Q4 guidance doesn’t bother me, especially since the company’s guidance has historically been conservative. Plus, with a $1 trillion holiday shopping season ahead, AMZN stock could easily revisit $2,000 per share in the near-term.
In my opinion, the pullback of Amazon stock is overdone, and AMZN stock is a strong buy.
As of this writing, Ian Cooper did not hold a position in any of the aforementioned securities.
