Keep Buying Amazon and Keep Making Money
If you have been long shares of Amazon.com (AMZN) - Get Report , you are a happy investor.
The stock, currently trading around $745, is heading towards $800 and beyond thanks to the company's incredible dominance in online retail.
The stock is up 18% in just three months. According to Carlos Kirjner, analyst at Sanford Bernstein, the stock has a clear shot at $1,000. From current levels, this would translate to a gains of more than 34%. Take a look at the chart, courtesy of TradingView.
Before AMZN can get to $1,000, it must get past $800, which has been my magic number over the past couple of months.
Amazon reports second-quarter earnings after the close Thursday. My guess is the stock, which has tons of buying momentum on its side, will reach $800 before the results are released in anticipation of a blowout quarter.
Assuming Amazon, which is not known for exceptional profit margins, surprises with better margins, the shares can move to around $850 to $875, marking a rise of 15% to 17% from current levels.
If the stock reaches $875, this would still put the shares at about 13% below the $1,000 threshold. The bet is traders wouldn't want to miss the ride up, creating increased buying pressure while squeezing out short-sellers, who argue valuation concerns.
So add more shares now ahead of what is likely to be a buying frenzy next week.
This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.