Amazon: Growth Scare Presents An Opportunity

Beau Marshall
171 Followers
(35min)

Summary

  • Amazon's main markets of online retail and cloud computing are by no means saturated and can support decent revenue growth for years to come.
  • Automation in fulfillment centers and more high-margin Advertising revenue can increase North America and International segment margins, as can the faster growth of AWS.
  • Management has historically focused on operating cash flows as a performance metric. The stock trades at a P/OCF below 20x, a valuation level which has produced very good returns historically.
  • My fair value is around $260, providing a 25% margin of safety, enough for a buy rating.

Cardboard package delivery at front door

Jorge Villalba

In his famous 1997 annual letter, Amazon.com, Inc. (NASDAQ:AMZN) founder Jeff Bezos promised shareholders that “when forced to choose between optimizing the appearance of our GAAP accounting and maximizing the present value of future cash flows, we'll

This article was written by

171 Followers
I am a UK-based long-only investor with a strategy which revolves around finding companies which can be multi-baggers over a 5-10 year time horizon, though, as a great man once said, my favourite holding period is forever. I am looking for companies that have a high probability of substantial revenue and earnings growth which is not fully appreciated in current market prices. I rarely take positions in stocks which are GAAP unprofitable, and if I do it will only be a small position. I am sector agnostic, though I prefer to invest in less cyclical and higher growth areas. My geographical bias is towards the United States. I have an Investment Management Certification qualification from the CFA Institute of the United Kingdom. I have found that writing helps me to crystallize my thoughts and to maintain sufficient rigour in my research process. It also helps me to hold myself accountable and to avoid mentally re-writing history. In fact, I recommend this salutary exercise to all active investors whether or not the writings are meant for publication. Seeking Alpha is a great resource with a flourishing community that I am happy to be a part of, so becoming a contributor was a natural step. I hope you enjoy my offerings.

Analyst’s Disclosure:I/we have a beneficial long position in the shares of AMZN either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

Recommended For You

About AMZN Stock

SymbolLast Price% Chg
Market Cap
PE
Yield
Rev Growth (YoY)
Short Interest
Prev. Close
Compare to Peers

More on AMZN

Related Stocks

SymbolLast Price% Chg
AMZN
--
AMZN:CA
--