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Amazon is king of the FAANG stocks, this portfolio manager says


So far in 2019, Amazon (Amazon Stock Quote, Chart NASDAQ:AMZN) has done well to recapture some of the ground it lost over last fall, climbing about two-thirds of the way back to the $2,000 plateau hit last summer.

And there should be lots more upside to come, says Scotia Wealth’s Stan Wong, who thinks that the divorce drama surrounding founder and CEO Jeff Bezos won’t have any negative repercussions.

“So far it hasn’t seemed to affect the company. I think that they’re going to continue to grow,” says Wong, director of wealth management at Scotia Wealth, to BNN Bloomberg on Thursday.

Yesterday, news broke that Bezos and his wife MacKenzie Bezos had agreed to a settlement, one which will see MacKenzie keep one-quarter of the duo’s Amazon stock for a total of $35 billion. The seemingly amicable split came about rather speedily, with both parties expressing their gratitude toward the other over concluding the divorce proceedings.

Wong says Amazon’s growth profile looks the best among the FAANG group of tech companies.

“Of the FAANG stocks out there, this is the one you want to own, along with a name like Google and then Facebook as a name to own on the second shelf,” he says.

“If you look at the number of Internet users, mostly in the developed countries, [Amazon] has a huge runway for growth to catch onto all the other people in the world that are starting to get Internet access and be able to sell products to them, so that runway for growth is tremendous for a name like Amazon,” he says. “My feeling that is right now they’re fighting with Walmart but really Walmart is fighting against Amazon and Amazon is just cruising along and doing very well.”

Amazon last reported its earnings on January 31, featuring fourth quarter revenue of $72.4 billion and EPS of $6.04 per share, both of which were better than the consensus expectation of $71.9 billion and and $5.68 per share. (All figures in US dollars.) Management’s guidance for 2019 spoke of higher spending across hiring and capital expenditures after less investment in those areas in 2018.

Wong says the company looks fundamentally strong.

“We own it in our portfolio. Right now, their revenues are about $275 billion this year and by 2023 it’s going to be over $500 billion,” Wong says.

“It recently broke above the 200-day moving average from its December lows and it’s trading at around 67x forward earnings. That’s expensive but it’s close to a 40 per cent EPS growth rate. I think that with what’s happening in the cloud space with Amazon Web Services, that growth is going to help it and they’re not just totally dependent on the retail side of things,” he said.

Disclosuree: Cantech’s Nick Waddell owns shares of Amazon

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About The Author /

Jayson is a writer, researcher and educator with a PhD in political philosophy from the University of Ottawa. His interests range from bioethics and innovations in the health sciences to governance, social justice and the history of ideas.
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