All hail the king of e-commerce! Amazon (Amazon Stock Quote, Chart, News NASDAQ:AMZN) may have been drifting over the past while but the company’s fundamentals are more than solid, says portfolio manager Bruce Murray, who thinks the stock will be a winner for years to come.
It’s Black Friday week once again and Amazon is trotting out the deals, aiming to take a bigger piece of the consumer pie than it already has with the lure of one-day shipping and specials for Prime members. The “Amazon Effect” has been laying waste to a number of sectors over the years but there are signs that traditional bricks and mortar retailers are finally learning the ropes of online shopping.
Competitors like Walmart and Best Buy have upped their e-commerce game, meanwhile the shine seems to have come off both Amazon and the FAANG stocks in general, who while not tanking in 2019 have also not led the markets in gains.
Amazon, down in trading on Friday, bumped over the $2,000 per share mark a couple of times over the past year and a half but has had trouble this fall in gaining any momentum —the stock has mostly been in sub-$1,800 territory since September. (All figures in US dollars.)
Yet the stock and the company are tough to bet against, says Murray, CEO and CIO of The Murray Wealth Group, who spoke to BNN Bloomberg on Thursday and singled out Amazon as one of his Top Picks for the next 12 months.
“All of our top picks are focused on stocks that we believe can grow in a market that has done very well over the last year and maybe the upside in a lot of stocks is limited to five to ten per cent. Amazon just continues to gain share in retail and other businesses,” Murray says.
“The one-day delivery has been a huge success. We see nothing stopping Amazon. Their computer services business, their cloud business is the leader,” he says.
“We just think that this stock is going to do very well,” Murray says. “It’s expensive but the cash flow is catching up to the stock very quickly. It may go flat for a year or two but then the cash flow is going to power right behind it and push the stock higher again.”
In their own separate ways, all of the FAANG stocks have been dealing with headwinds over the past year or more, with Netflix facing rising competition in the streaming market, Facebook and Google battling regulatory pressures, and while Apple has been doing well, concerns still linger over the longevity of its product line.
Amazon’s issues may have more to do with its past success more than anything else, as the company has expanded its businesses to such an extent that doubts have emerged that it can keep up its status as a high-growth company.
Last month, Amazon filed its third quarter financials, which while surpassing expectations on revenue at $70 billion versus the consensus estimate of $68.8 billion, came in under consensus on earnings at $4.23 per share compared to the expected $4.62 per share. Management also provided softer-than-expected guidance for the company’s traditionally strong fourth quarter.