Having traded above $3,000 U.S. per share in recent months, those concerned about the valuation of technology giant Amazon.com Inc. (NASDAQ:AMZN) relative to its growth potential have lost out on some pretty impressive growth through this pandemic from one of the world’s most valuable companies. In this article, I’m going to highlight why I think this trade could continue for a while longer.
Amazon’s recession–proof business model is a key reason many investors have flocked to this stock during this pandemic. The e-commerce purveyor has risen to a greater degree than many of its peers. E-commerce growth has only been acerbated as a result of this pandemic. Further, the company’s valuation increase has not outpaced its growth rate to an unsustainable degree. The same cannot be said for some of the other blue chip tech players out there. I have commented on a few of these recently.
Amazon’s continued focus on reinvesting in its core business is another reason I have touted this stock in the past as the company is able to earn above market average returns on dollars invested with one of the best return on investment capital (ROIC) metrics in this sector. Investors looking for big tech exposure today ought to consider Amazon as a top pick, in my view.
Invest wisely, my friends.
