Amazon (AMZN) Is Grounded, Even With Bezos in the Clouds

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Amazon.com, Inc. (AMZN) is all over recent news. But little is focused on the company.

You’ve likely heard that Jeff Bezos is now an astronaut. The Amazon founder (and richest man in the world) blasted 65 miles up into space and was weightless for four minutes. The flight lasted 10 minutes. He took along his brother Mark, 82-year-old Wally Funk, and 18-year-old Oliver Daemen – the world’s youngest astronaut.

Key Takeaways

  • Amazon founder Jeff Bezos recently traveled into space.
  • However, Amazon stock is grounded with solid fundamentals.
  • Amazon shares are also seeing healthy buying.

What made the flight interesting is that it was unpiloted and all civilian, but that news was immediately tainted upon return. At the press conference, Bezos thanked all Amazon customers and employees for paying for his trip. Likely sincere, the press turned it into a wealth divide debate.  Poor Jeff.

Whether or not he was insulting or genuinely thankful misses the point: The age of space travel is here. Investors may be worried what Amazon will be like left on the ground with Bezos’ focus in the stars.

Let’s now shift focus to Amazon stock. Its share price has risen nearly 10% year to date. That’s roughly $180 billion of added market value. The gain alone is larger than the entire size of 95% of the 6,000-plus stocks I track. Yeah, I’m a data nerd. Only 63 stocks are larger than Amazon’s gain this year alone.

And there’s a fundamental reason for that. The company is growing like a weed. Looking at the income statement, we see indisputably big growth happening:

Yahoo Finance

According to FactSet, here are some other incredible growth metrics:

  • One-year sales growth of 38%
  • Three-year sales growth of 30%
  • One-year earnings growth of 82%
  • Three-year earnings growth of 108%
  • Gross profit margin of 40%

I expect this strong trend to continue given how reliant we are on Amazon. But keep in mind: Amazon has several businesses – not just the giant online retailer model. These include:

Wikipedia

Many of these are growth drivers. Remember when Amazon bought Whole Foods Market? That’s driving Amazon Fresh.

Gaming is growing, as is the hardware assistant platforms of Echo. Alexa, the virtual assistant, is omnipresent. Lesser known divisions are growing too, like Amazon Web Services (AWS), the company’s cloud computing arm. AWS just announced its AI allowing health records to be easily accessed in the cloud:

BusinessWire

In addition to looking at fundamentals for future price appreciation, don’t overlook how important it is to gauge how the stock is trading. Seeing if a stock is being accumulated by big professional investors can help us form a future potential picture for the stock.

My proprietary system flags when Big Money is likely moving into a stock. We can see in the table below that there has been a little activity in the past three months, but its 32 appearances as a top 20 stock in my ranking make it a clear outlier … a stock that towers above almost all others.

MAPsignals

In the below chart, I’ve notated when my proprietary system flagged buying in Amazon shares. And you can see how those days traded on abnormally large volume:

TradingView.com

The Bottom Line

Let’s wrap this up. While Bezos’ head may be in the clouds, I wouldn’t worry – Amazon is firmly grounded as a well-oiled machine. I expect the upcoming earnings to show another quarter of growth. The stock has been a Big Money magnet for years. I don’t expect that to change in the years to come.

Although Amazon founder Jeff Bezos went into space recently, the stock is firmly grounded in growing fundamentals and Big Money buying. I’ve learned to not fight those trends.

Disclosure: The author holds no position in AMZN at the time of publication.

Source: Investopedia