Our Stock of the Week is Amazon (AMZN). The well-known retailer is one of the Magnificent Seven stocks but has lagged recently on some concerns about retail sales and the fact that it is not a provider of AI infrastructure like the primary market leaders.
Amazon is relatively cheap compared to some of the other big-cap names. It is anticipated to grow its EPS by 40% in 2024 to 3.82. That is a forward PE of 40, which is very reasonable compared to a name like Apple (AAPL), which has EPS growth of single digits but a PE of around 30.
Amazon is reporting earnings on February 1. Current estimates are revenues of $166 billion in revenue and EPS of $0.79. Recently, Truist raised its price target on AMZN to $180 and stated that it anticipates that Q4 results should come in at the very high end of expectations on higher e-commerce and Ad revenue.
Amazon has 41 analysts following it, and the average price target is $184.66 which is about 18% upside from the current price. The lowest recent estimate is around $160.
Our view is that the extreme strength in AI will drive investors to find other big-cap names that are not as extended or as expensive. There is also recent data that shows that the consumer has remained stronger than expected, and that may benefit Amazon’s upcoming earnings report.
Technically, we are looking for a move over recent highs around $157. There isn’t much resistance over that level, and there will be a solid week for positive anticipation to grow.
As always, we will not chase the stock on Monday morning but will be looking to trade it aggressively as the price action develops.
This post is for educational purposes only! This is not advice or a recommendation. We do not give investment advice. Do not act on this post. Do not buy, sell, or trade the stocks mentioned herein. We WILL actively trade this stock differently than discussed herein. We will sell into strength and buy or sell anytime for any reason. We will actively trade into any unusual activity. At the time of this post, principals, employees, and affiliates of Shark Investing, Inc. and/or principals, clients, employees, and affiliates of Hammerhead Financial Strategies, LLC, directly or indirectly, controlled investment and/or trading accounts containing positions in AMZN. To accommodate the objectives of these investing and/or trading accounts, the trading in these shares will be contrary to and/or inconsistent with the information contained in this posting.
