If you could only buy shares of one stock, the one you would choose is Amazon.com (NASDAQ: AMZN). Certainly there are other companies that seem likely to grow much faster, and companies that pay dividends, while Amazon doesn’t (yet), but Amazon has a lot to like and its stock recently. they also appear to be attractively priced.
Here’s a closer look at the company and why it appeals to me.
More than an e-commerce giant
Amazon is much more than an online marketplace that you visit to buy all kinds of things. Here they are alone Some of the many other operations under its roof:
- Whole Foods Market: A Family-Friendly Luxury Supermarket Chain
- Amazon Web Services (AWS) – A Major Cloud Computing Services Platform
- Zappos: a premier online clothing and footwear retailer
- Amazon Robotics: Robotics and Automation Technology
- Amazon Pharmacy – Introduces Prepackaged Doses of PillPack
- Twitch Interactive – A live video streaming platform, with about 140 million monthly active users as of 2020
- Kindle: a major e-reader platform
- Alexa: a personal assistant powered by artificial intelligence
- Amazon Prime – A Multifaceted Membership Program Offering Videos, Books, Music, and More
- GoodReads: social networks for book lovers
- Audible: audiobooks
- Ring – Home Security Equipment & Services
- Fire tablets, Fire TV and Echo: Amazon’s own hardware devices
With a recent market value of $ 1.6 trillion, Amazon is one of the most valuable companies in the world. However, it can still grow at an impressive rate. In its last fiscal year, total revenue grew a whopping 38%. That growth is likely to continue for the foreseeable future as well.
Many of Amazon’s businesses and initiatives are likely to generate growing dividends, such as Amazon Logistics, which is the transportation network that is strengthening its fulfillment centers and delivery capabilities to deliver more and more of the company’s products instead of depending on them. . UPS, FedEx, or the United States Postal Service to do much of this work. It is quite easy to imagine that Amazon will also offer to other companies and entities in the future.
The grocery realm is clearly massive, and it’s another industry Amazon is growing in, partly through its wholly-owned Whole Foods Market and also with its new Amazon Fresh outlets, which target shoppers. of more conventional groceries. With the pandemic that has caused many stores to go bankrupt, Amazon has the opportunity to acquire valuable real estate for future Amazon Fresh locations. Many other Amazon operations also have great growth potential, such as Amazon Pharmacy.
Another very promising growth engine for Amazon is international expansion. For example, it is establishing itself in India, where it is partnering with tens of thousands of vendors in hundreds of cities, and India has a lot of cities, with a total national population that has recently exceeded 1.3 billion.
Of course, no company or stock is bulletproof, offering guaranteed growth. All businesses face at least some risks, and one that Amazon now faces is the threat of unionization, as warehouse workers in Alabama are trying to unionize.
Yes, a unionized workforce will likely demand better working conditions and higher wages, but that may not be all bad for Amazon. For one, it has deep pockets and can meet demands. Meanwhile, if these labor-intensive jobs become more attractive to workers, employee turnover is likely to drop, which can save the company money. And if Amazon is a generous employer, that can put pressure on smaller companies that are after the same workforce, which could be helpful to Amazon while hurting small businesses at the same time.
The price is ok
Best of all, this growing stock is trading at a fairly reasonable price. Its recent price-to-earnings (P / E) ratio was a high 76, but that’s much less than its five-year average of 156. Similarly, its recent price-to-cash flow ratio of 24 is well below its five-year rate. annual average of 31. Amazon’s stock has seemed highly overvalued for much of its existence, but it has continued to exceed expectations, growing rapidly. Those who have waited for a more obvious bargain price have often waited years.
Consider Amazon stocks for a spot in your portfolio. It offers a lot of potential for growth and diversification.
This article represents the opinion of the author, who may disagree with the “official” recommendation position for a premium Motley Fool consulting service. We are variegated! Questioning an investment thesis, even one of our own, helps all of us think critically about investing and make decisions that help us be smarter, happier, and wealthier.