Is it the Right Time to Invest in Amazon?

Consumer shopping trends have done a total flip due to the change in shopper expectations which have become global. Companies with strong online presence are capitalizing from the change in shopping trends due to the Covid 19 pandemic. Consumers are still restricted from travel, still focused on working remotely and staying-at-home.

Of the Top 10 retailers Amazon has taken 2nd place, pushing Costco down the rankings. As Amazon consumers are still home-based, the retailer’s product category mix choice has changed to home improvement, leisure and entertainment, home-based health and beauty and household goods with an increase in high-ticket items. Amazon has expanded well and in-stock inventory is now more available with a larger variety to choose from.

Amazon Fresh and Whole Foods Market have also seen a marked increase due to free 2-hour deliveries and free 1-hour pick up to Prime members for orders over $35 to $50 (grocery deliveries) in cities such as Atlanta, New York, Boston, Seattle, San Francisco, Houston. Shoppers are able to purchase products like meats, cheese, fruit, vegetables, and household items online avoiding the daily and weekly drag to the supermarket.

With the ‘new type’ of consumer in mind, Amazon has seized the latest trends, technology and opportunity offering quality products, hassle-free and conveniently delivered directly either to your vehicle or to your doorstep.They are today a retail giant, dominating and influencing trends and rated at the top with brands like Google, Facebook, Microsoft and Apple.

Buying opportunity – a time to start accumulating Amazon stocks

In May 1997, Amazon’s IPO was $18 per share. It has taken 24 years for this share to gain immensely. So is it time to buy Amazon stocks again? We see the recent pullback and the current price weakness as a potential sign to buy. Amazon’s e-commerce and cloud computing have provided the giant with the edge and more growth is in the tailwinds. Since the last company results, a large number of analysts are more bullish on the share, increasing share price targets with 33% growth in the long term.

We analysed Amazon’s chart, considering amongst other indicators, the 200 day moving average. This moving average gives the investor an indication of whether a share is trending up or down.On this premise, Amazon is looking good however, bare in mind, when it comes to price it is not a cheap stock so it all depends on your appetite and whether it is affordable to you. History tells us that not buying this winner due to valuation would be a mistake. So yes, we believe you should start accumulating Amazon stocks in your portfolio. Traders should however heed caution. For those looking to make a quick buck – Amazon can get volatile, pulling back quite a lot, so those who are in need of capital preservation should rather keep away. The giant offers an appealing risk/reward ratio with movement towards $4000 in the long term.

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