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With Q4 Earnings Three Weeks Away, Amazon Stock Is Priced Right

After a spectacular first half of 2020, shares in e-commerce giant Amazon (NASDAQ:AMZN) plateaued at an all-time high of $3,531.45 last September. For the most part, Amazon stock has bounced between $3,000 and $3,400 since then. At the moment, it is in the middle of a two-week dip. With fourth-quarter earnings just three weeks away, AMZN in its current $3,100 range, offers an attractive buying opportunity.

Amazon (AMZN) logistics center in Szczecin, Poland.

Source: Mike Mareen / Shutterstock.com

Amazon gets a solid ‘A;’ rating in Portfolio Grader. It’s also featured in my list of the “7 Safest Stocks to Start Off 2021 on the Right Foot.

Amazon stock deserves to be on that list — it doesn’t get much safer than AMZN — but it has also frequently been a high-growth stock. 2020 was a big year for the company (especially the first half), and the stars are in alignment for 2021 to be epic as well. 

Q4 Earnings Are Going to Kick Off the Year With a Bang

Here are some of the big highlights that point toward a killer fourth quarter for Amazon. The holiday shopping season is the big catalyst, with predictions that Amazon may have captured as much as 42 cents of every dollar spent shopping for gifts.

Prime Day was delayed until October in 2020, so it is also included in Q4 numbers. Analysts peg Amazon sales for that two-day event to be a record-setting $10.4 billion, up 45.2% year over year. Amazon itself chose to highlight the performance of third-party marketplace vendors. The company said these small- and medium-sized businesses sold over $3.5 billion worth of goods during Prime Day 2020, up nearly 60% YoY.

Of course Black Friday and Cyber Monday are also part of the Q4 picture. With the novel coronavirus pandemic cutting visits to retail stores, sales for this weekend were expected get an even bigger boost than usual. Amazon is keeping silent about specifics, but did announce that Cyber Monday was the single biggest shopping day in its history. That sounds pretty good. The company also chose once again to put a spotlight on its Amazon Marketplace vendors, who sold over $4.8 billion in merchandise over that long weekend. Just like Prime Day, this represents about a 60% YoY gain.

Last year, after reporting record Q4 earnings, AMZN posted double-digit gains. Get ready for a repeat performance. If you are considering adding Amazon shares to your portfolio, you’ll want to do so before the company reports Q4 2020 numbers on Feb. 4.

What About the Parler Lawsuit?

You undoubtedly saw Amazon in headlines over the past several days after Parler sued the company for cutting off its services. The far-right social media platform had been hosted by Amazon Web Services (AWS), but Amazon kicked it off following the chaos at the U.S. Capitol.

The move effectively brought Parler offline, resulting in the lawsuit. Amazon claims a long list of terms of service violations, while Parler claims Amazon broke its contract by not giving 30 days notice before revoking service.

Yes, the episode is making news, but I’m not worried that this issue is going to have any impact on Amazon stock one way or another.

The Bottom Line on Amazon Stock

It’s pretty obvious that I’m bullish on Amazon stock; however, I’m far from the only one. 

In November, UBS analyst Eric Sheridan reiterated a Buy rating for AMZN along with a $4,000 price target. Hours ago, Cowen analyst John Blackledge reiterated an Outperform rating with a $4,350 price target — and he’s not even at the top of that price target scale. The Wall Street Journal tracks 49 analysts who offer AMZN coverage. They overwhelmingly rate Amazon stock as a Buy (42 of 49 rate it Buy and four have it as Overweight). Their average 12-month price target of $3,824.99 offers nearly 23% upside. The highest price target among the bunch is $4,500 by the way. 

In summary, Amazon is expected to report its Q4 earnings on Feb. 4 — earnings that will include a killer holiday quarter. Analysts are coming up with price targets that put AMZN on a trajectory for near 23% growth over the next 12 months. And AMZN is currently in a dip that’s shaved roughly 6% off its price since the end of December.

Do the math and Amazon stock seems like a no-brainer. Just don’t wait too long.

On the date of publication, Louis Navellier had a long position in AMZN. Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article. InvestorPlace Research Staff member primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.

Louis Navellier had an unconventional start, as a grad student who accidentally built a market-beating stock system — with returns rivaling even Warren Buffett. In his latest feat, Louis discovered the “Master Key” to profiting from the biggest tech revolution of this (or any) generation. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.


Article printed from InvestorPlace Media, https://investorplace.com/2021/01/with-q4-earnings-three-weeks-away-amazon-stock-is-priced-right/.

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