Amazon stock (AMZN) - Get Amazon.com, Inc. Report continues to catch the attention of Wall Street as 2021 unwinds. After Cowen & Co. called shares of the Seattle-based tech behemoth a “mega-cap pick for 2022”, another research shop added AMZN to its top ideas list.
Today, the Amazon Maven reviews Evercore ISI’s bull case, and explains why optimism may be warranted.
(Read more from the Amazon Maven: Why Wells Fargo Sees 20% Upside)
Why so upbeat in 2022?
Analyst Mark Mahaney considers AMZN "arguably the single best fundamental asset in Net-land". He seems to think that 2022 will be a year for the company to reap the benefits of the heavy investments in infrastructure that it has been making recently.
The expert’s observations are in part reflected in Amazon’s sky-high capex numbers seen in the past several quarters (see below). The company spent “only” $17 billion in capital projects in 2019, which represented 7% of total assets at the time. This number jumped to $57 billion in the past four quarters, amounting to 15% of total assets today.
The analyst has mentioned two key factors that position Amazon to perform well in e-commerce going forward. First is the retailer’s ability to deliver quickly — in certain markets within five hours of the purchase — which is a great asset during a period of supply chain challenges.
“Amazon and Google are using new targeting/attribution models for their ad platforms that can come reasonably close to matching [Identifier for Advertisers] effectiveness."
One other important piece
I have also picked Amazon as my favorite Big Tech stock for the new year. While I agree with Evercore’s argument above, I also highlight one very important factor that makes owning AMZN today compelling, in my view: price.
The chart below shows that Amazon stock has been, by far, the worst-performing name within the popular FAAMG group. AMZN’s sub-10% YTD gains, for example, compares dismally with GOOG’s whopping 70% returns.
While some may see this lack of momentum as a negative, I see it as a buying opportunity. Look a couple of years down the road, and AMZN’s 2025 P/E of only 23 times vs. Apple stock’s (AAPL) - Get Apple Inc. Report 27 multiple starts to look like a bargain for a growth stock like this one.
(Read more from the Amazon Maven: AMZN Could Skyrocket in 2022)
If you could pick only one, which of the four most valuable stocks in the S&P 500 would you choose to buy today and own through all of 2022? Chime in below!
Is the price right?
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(Disclaimers: this is not investment advice. The author may be long one or more stocks mentioned in this report. Also, the article may contain affiliate links. These partnerships do not influence editorial content. Thanks for supporting the Amazon Maven)