Should You Buy Amazon.com Stock? Yes, why this is one of Barron’s top picks.
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Amazon.com stock has trailed the S&P 500 this year.
Ronny Hartmann / AFP via Getty Images
This article is an excerpt from Barron’s 10 Favorite Stocks for 2022. To see the full list, click here.
Amazon.com
the dominance of in two large companies makes it a rarity. It has 40% of the US e-commerce market and about half of the lucrative cloud computing industry, through Amazon Web Services. It is estimated that 85 million American households are Prime members.
The stock (ticker: AMZN), recently at $ 3,377, has trailed the market for the past year. It’s still not cheap, trading at 66 times projected earnings in 2022, but none of its megacap internet peers have better prospects. The fastest growing Amazon companies, like AWS and Advertising, have high margins.
Evercore analyst Mark Mahaney predicts annual revenue gains of over 20% and increased margins over the next two to three years. It has an outperformance rating on Amazon, with a price target of $ 4,300.
Mahaney calls Amazon “TAMiest†of the mega-cap Internet companies because of the huge opportunities in retail and cloud computing, while offering “the best mix of technologyâ€. TAM refers to the “total addressable marketâ€.
With over $ 60 billion in annual sales, Amazon Web Services alone could be worth $ 1,000 billion. That means investors pay around $ 700 billion for the rest, which includes major online retail, offline shopping (including Whole Foods Market), advertising, media (Amazon Prime Video, Audible) and logistics, including warehouses, trucks and planes. .
Two potential benefits for 2022 would be a spin-off from AWS or a long-awaited stock split.
| Company / Teletypewriter | Recent price | Modification of the current fiscal year | 2021E EPS | 2022E BPA | 2022E P / E | Dividend yield | Market value (bill) |
|---|---|---|---|---|---|---|---|
| Amazon.com/AMZN | $ 3,377.42 | 4% | $ 41.11 | $ 51.37 | 65.7 | Nothing | $ 1,713 |
| AT&T / T | 23.71 | -18 | 3.38 | 3.17 | 7.5 | 8.8% | 169 |
| Berkshire Hathaway / BRK.A | 454,550.00 | 31 | 17,466.30 | 18,928.50 | 24.0 | Nothing | 673 |
| General Motors / GM | 58.39 | 40 | 6.73 | 6.93 | 8.4 | Nothing | 85 |
| Hertz Global Holdings / HTZ | 21.01 | -22 * | 4.02 | 2.55 | 8.2 | Nothing | ten |
| IBM / IBM | 125.93 | 5 | 10.05 | 11.04 | 11.4 | 5.2 | 113 |
| Johnson & Johnson / JNJ | 173.01 | ten | 9.83 | 10.38 | 16.7 | 2.5 | 455 |
| Nordstrom / JWN ** | 20.05 | -36 | 1.27 | 1.99 | 10.1 | Nothing | 3 |
| Royal Dutch Shell / RDS.B | 42.82 | 27 | 4.86 | 6.19 | 6.9 | 3.9 | 166 |
| Visa / V *** | 214.37 | -2 | 5.91A | 7.04 | 30.5 | 0.7 | 467 |
* Since July 1st. ** Estimates for the financial years of January 2022 and January 2023. *** Sept. end of the fiscal year. E = estimate. A = real.
Source: FactSet
Write to Andrew Bary at andrew.bary@barrons.com