[NASDAQ: AMZN] U.S stocks closed the week in positive territory after positive results from the labor markets. The U.S labor market added more jobs than expected in December. This momentum was given a push by the Fed chairman’s remarks that the Fed would be more flexible with interest rates hikes in the future. With the possibility of a more flexible interest rates regime in the future, the market is likely to continue in its long-term bullish trend that started in late 2009. This also presents an opportunity to invest in high growth stocks that are heavily undervalued after last quarter’s stock market’s crash. One stock that is likely to perform well in 2019 is Amazon (AMZN).
Amazon is one of the stocks that presents an amazing investment opportunity in Q1 of 2019. One of the fundamentals to this stock that gives it a good standing in the market is its dominance in online retail. Amazon accounts for close to 50% of all online retail sales, and over 5% of all retail sales. With such a strong grip on the market and the growing importance of online retail, Amazon is likely to stay on a growth trajectory for years to come. This growth will reflect in its revenues, and by extension, drive up its share price as well. That’s because revenue growth is one of the factors that influence a stock’s trajectory. As long as revenues are growing, Amazon (AMZN) is likely to keep growing.
On top of that, Amazon is making investments that will further entrench its dominance in the market. For instance, the company is already working on its plan to build more physical stores all across the U.S. The goal is to get more entrenched in the food business. This push for dominance in the food business was quite visible in the company’s move to acquire Whole Foods for $13.7 billion. This gave it a much bigger presence in the food business, as well as pushed up its physical store count. In the long-run, this will drive up Amazon’s revenues, and bring further growth to the company’s stock.
Amazon’s long-term prospects are also supported by the fact that it has a very strong cash position. Amazon has a levered free cash flow of $13.96 billion. This means that the company has enough resources to keep investing in new growth opportunities, without having to over-leverage itself. This makes it a safe bet because it is fully insulated from any aggressive interest rate hikes in the future. It is one of the companies that have what it takes to give consistent growth irrespective of changes in interest rates. With such a strong cash position and a current ratio of 1.08, Amazon (AMZN) has what it takes to keep growing for years to come. It could top $2000 or more in 2019 and even higher valuations in the future. It’s a stock worth keeping in a watchlist for the long-haul.