Amazon is the best of the FAANG stocks, this investor says

Amazon (Amazon Stock Quote, Chart, News NASDAQ:AMZN) has been the stock to own these days, with its share price zooming up 50 per cent over the past month, but fund manager Ross Healy says the company is built for dominance long after COVID-19 has run its course.

“Of all of the FAANGs, the stock that stands out is very much Amazon, and if there’s any winner in this COVID-19 crisis it’s very clearly going to be Amazon,” says Healy, chairman of Strategic Analysis who spoke on BNN Bloomberg on Thursday.

Amazon is set to report its first quarter 2020 earnings next Thursday, with investors expecting fireworks from the e-commerce company’s top line as the world turns to online shopping and virtual conferencing in the age of social distancing.

The company’s Q1 which features results up to March 31 will give a taste of Amazon’s potential during the
current era, one which has seen not only more online retail but a boost in Amazon’s cloud computing segment AWS, which will benefit from exponentially greater traffic on video conferencing platforms like Zoom.

One of the few names to actually post a net gain during the market’s worst first quarter on record, Amazon reached a low of $1,626 per share at the worst of the market pullback in March but quickly made up that ground and having regained a spot above $2,000 has not looked back since, closing the week at $2,411 per share.

Healy says there’s more where that came from as people get more used to shopping online.

“I think if people are anything like me, they are actually kind of enjoying the experience,” Healy said. “And so I think that’s going to slop over after the COVID crisis has passed.”

“However, I think that this COVID crisis is going to recover slowly and therefore I think Amazon is going to continue to be a big winner,” Healy said. “And in the meantime, they’re doing all kinds of interesting things including disrupting the whole medical establishment and that’s a whole new area of growth for this company.”

“So yes, I like it a lot,” Healy added.

Amazon’s business may have kicked into high gear but the coronavirus and government responses to it have clashed with the company’s roaring business on a number of fronts.

Amazon just lost an appeal in France over selling and delivering so-called non-essential goods during the crisis, thus limiting its business. At the same time, workers in the United States have been vocal in complaint of the company’s work practices which they say don’t allow for social distancing.

Ahead of Amazon’s Q1, its fourth quarter 2019 featured revenue up 21 per cent to $87.44 billion and EPS of $6.47 per share. Analysts had on average expected revenue of $86.02 billion and EPS of $4.03 per share.

Amazon said it spent $1.5 billion over the fourth quarter in expanding its delivery to one-day and same-day service. At the time, management was calling for first quarter revenue between $69 billion and
$73 billion.