Why Amazon Stock Is A Good Buy For 2019
Should you add Amazon to your portfolio?
As it stands Amazon stock (NASDAQ: AMZN) is far below its highs and that is even when the stock rallied 9.5% on Wednesday. The low price that Amazon share price currently sits at is a good entry point for some investors.
In recent years, Amazon has dominated the online retail landscape, with multiple market-leading businesses under its belt. The greatest risk that Amazon stock faces does not come from competing companies, but from government regulations.
What Makes Amazon Stock a Good Buy?
Amazon doesn’t just rule the online retail market, but its presence in the cloud-computing space is also significant. Despite companies like Microsoft and Alphabet providing Amazon with competition in the cloud -computing niche, the online retailer has came out the strongest. The fact that Amazon has taken the majority market share in the cloud computing niche signifies how it can have success in new niches.
Amazon is spending billions on further research and development in emerging and new business markets. The funds which powers R&D comes from Amazon Prime’s subscription cash flow.
Unlike most tech-companies, AMZN gets praised by its stock-holders for its extensive research investments. Meaning that when Amazon decides to spend billions on a new investment, shareholders do not selloff or question the move. For Amazon stock, this means that volatility is low as the company moves into new markets.
The investments that Amazon makes result in huge growth, with Amazon’s revenue growth expected to be up 30% this year and 20% next year. Earnings per share is expected to reach $19.80 this year, with growth forecasted to reach 35% next year.
AMZN Stock Price Forecast
Amazon stock price has taken huge hits recently, in the form of 35% declines. In the past, Amazon’s selloffs have been followed by huge gains. This trend gives investors hope that the recent selloffs will follow the same pattern. Another positive note is that Amazon stock’s selloffs this month were due to broader market declines and not internal issues that the company faces. This may mean that once the market bounces back, AMZN stock will follow.
Strong Holiday Sales
Wednesday saw Amazon breaking holiday-sales records, with “more items ordered worldwide than ever before”. Amazon sold millions more own-branded products than last year, with the Alexa device being used to order three times more products than 2017. Over 10 million people signed up to Amazon Prime, which is promising to say the least for AMZN. This means that Amazon’s Q4 performance will be impacted positively by these strong sales.
To conclude, the immense market share that Amazon has makes it a clear main-stay in the online-shopping market. Its cloud-computing services make it diverse, lowering exposure and its Prime memberships provide strong cash-flows. Despite short-term declines, AMZN share price will bounce back once the market rebounds. Stay updated with the latest stock market headlines.