Is Amazon poised to rise another 30% this year?
Amazon has had an incredible year on the market so far, seeing its share price rise by almost 25%. True, that’s only a partial recovery from its high-point last year, but Amazon has weathered the tech backlash better than most of its peers and looks to be carrying on its upwards trajectory in 2019. That, at least, is the message being sent by Societe Generale, which gave the company a ‘buy’ rating earlier this month.
Since Dominion first bought Amazon, the stock has appreciated by more-than 500%!
Source: Yahoo Finance
In a recent note, Societe Generale wrote to investors saying that Amazon was currently trading at “an attractive entry point” (long-time investors in our Ecommerce Fund can judge from the graph above how attractive their own entry point was). Amazon has been making back the ground that was lost to its low-point in December 2018 and is now trading at its highest point since last October. There is more, according to analyst Arnaud Joly, to come. In the note, he wrote:
“The most remarkable progress at Amazon over the last few years has been the large jump in profitability. We think investors may pay more attention to earnings growth at Amazon rather than focusing solely on top-line momentum.”
After years of operation without profit, the company has become a cash-generating machine, spurred on by lucrative industries like cloud computing and online advertising – both of which Amazon is well-positioned within. Add to that the fact that it remains probably the world’s most recognisable retailer, owns an ever-expanding brick-and-mortar empire, is a major name in streaming music and video, and operates probably the world’s most successful subscription scheme (Amazon Prime) and… well, you can see why Joly has become a fan. And why we did, back in 2014.
Societe Generale expects Amazon’s incredible financial results to persist over the next few years and says that a positive reaction from investors could push the share price up by another 30% this year. With earnings season just around the corner (according to Nasdaq, Amazon will report earnings on the 25th of this month), we won’t have to wait long to find out!
Dominion holds Amazon in its Global Trends Ecommerce Fund, having added it in November 2014.
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