Prime Day Shows Why Amazon Stock Is the Ultimate ‘Buy’

Amazon (NASDAQ:AMZN) stock is a no-brainer buy.


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Back in November 2019, I was amazed that at $1,752, AMZN stock still was “cheap.” At the moment, the stock is up to $3,340 and could easily hit $4,000 a share by 2021.

For one, it’s Nothing can stop its sales growth. Two, it is likely to run ahead of the holiday season just as it usually does. And three, it’ll continue to benefit as millions of people opt to shop online to avoid crowds with the pandemic still at large.

Granted, the stock is pivoting lower after failing at double-top resistance. But I don’t believe the pullback will last long at all. From here, my target is $4,000 by early 2021.

Growth Isn’t an Issue for AMZN Stock

Millions of people are now shopping strictly online with the pandemic.

In fact, as I have noted, Wedbush analyst Ygal Arounian argues the pandemic led to big behavioral shifts in consumer shopping. “Many consumers won’t go back to physical store shopping as they did before. The retail landscape will look dramatically different in the coming years.”

In addition, according to CNBC contributors Lauren Thomas and Melissa Repko:

“Digital sales are expected to account for 14.4% of all U.S. retail spending this year, and 19.2% by 2024, according to eMarketer. Online sales are expected to total $794.50 billion in 2020, representing year-over-year growth of 32.4%, the firm said, compared with a pre-pandemic forecast for an increase of just 18%.”

Amazon’s share of the retail pie is expected to grow to 39% this year — especially as brick-and-mortar retailers tumble.

Plus, Amazon’s Prime Day is expected to pull in $10 billion in sales this year. Helping even more, 35% of customers plan to use Amazon this year more than in past years, says Barron’s contributor Teresa Rivas. Better, 52% of U.S. consumers plant to start their shopping on Amazon, with 53% saying they could do all or most of their shopping on the site.

That news alone will send the AMZN stock to higher highs.

Online Shopping Could Be Up Big This Holiday Season

While brick-and-mortar retail sales could fall 14% this year, according to eMarketer, e-commerce sales could grow 32.4% this year. That would follow a 14.9% gain in 2019. In addition, 71% of adults say they plan to do more than half of their holiday shopping online in 2020.

Analysts at Deloitte say retail sales could grow 1% to 1.5% this year to between $1.147 trillion and $1.152 trillion. In 2019, growth came in at 4.1%. Unfortunately, times are a bit different with the pandemic wreaking havoc.

Amazon’s Earnings Growth Is Off the Charts

Mizuho Securities’ analyst James Lee has a “buy” rating on the stock with a price target of $4,000, as well. He says third-quarter revenue is already ahead of estimates thanks in part of the Prime Day. “We believe that Amazon has already anticipated a strong demand by accelerating the fulfillment buildout from 15% year over year growth in fiscal 2019 to 50% in fiscal 2020.”

In addition, Truist analyst Youssef Squali has a “buy” rating and a target of $3,600 thanks to a resilient consumer.

In short, it’s tough to argue against Amazon’s growth — especially with such a dramatic consumer shift to shopping strictly online. With brick-and-mortar retail headed out the door, AMZN stock is a no-brainer opportunity.

On the date of publication, Ian Cooper did not have (either directly or indirectly) any positions in the securities mentioned in this article.

Ian Cooper, an contributor, has been analyzing stocks and options for web-based advisories since 1999.

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