By Peet Serfontein & Zimele Mbanjwa
Amazon is one of the largest e-commerce and cloud computing companies in the world. It enables the sale of millions of products by companies and third parties across dozens of product categories including music, books, electronics, fashion, and numerous others.
Amazon also offers personalised shopping experiences and direct shipping to customers. Additionally, Amazon is a major player in the cloud computing space through Amazon Web Services (AWS), where it provides digital streaming and entertainment services, manufactures consumer electronics, manages a robust logistics and delivery network, and offers subscription-based services like Amazon Prime. The company has exposure to grocery retail through Whole Foods Market.
Technically, a Piotroski F-score of seven, makes the stock an attractive investment opportunity (see the insert on the main chart). The score suggests that the company has sound financial health across multiple metrics and is generating profits and efficient cash flows, signalling a strong operational performance. The stock is also in the Markup phase of the Wyckoff Market Cycle. This phase occurs when demand outweighs supply, leading to rising prices as more investors seek to buy, in anticipation of higher returns.
The stock remains just above the 200-day simple moving average (SMA) of $173.73, marking an attractive entry point given the various bullish indicators.
Fading downside momentum according to the MACD indicator as well as upwards movement of the On-balance Volume indicator, supports our bullish stance.
Share Information
| Share Code | AMZN |
|---|---|
| Industry | Retailing |
| Market Capital (USD) | 1 962.67 billion |
| One Year Total Return | 29.10% |
| Return Year-to-Date | 23.07% |
| Current Price (USD) | 187.00 |
| 52 Week High (USD) | 201.20 |
| 52 Week Low (USD) | 118.35 |
| Financial Year End | December |
| The share has made strong gains year-to-date, with several technical indicators suggesting further upside price momentum. |
Consensus expectations
(Bloomberg)
| FY23 | FY24E | FY25E | FY26E | |
|---|---|---|---|---|
| Headline Earnings per Share (USD) | 5.08 | 5.72 | 6.67 | 7.78 |
| Growth (%) | 12.51 | 16.64 | 16.62 | |
| Dividend Per Share (USD) | ||||
| Growth (%) | ||||
| Forward PE (times) | 32.69 | 28.03 | 24.03 | |
| Forward Dividend Yield (%) | ||||
| Sold double-digit earnings growth is expected over the short-to-medium term. | ||||
Buy/Sell Rationale
Technical Analysis:
Fundamental view:
| Share Name and position | BALL US - BUY (Continue to hold) | CRM US - BUY (Continue to hold) | GIS US - BUY (Continue to hold) |
|---|---|---|---|
| Entry | 61.71 | 353.79 | 66.9 |
| Current | 65.63 | 374.43 | 69.82 |
| Movement | +6.4% | +5.8% | +4.4% |
|
A price action that is developing a broadening bottom pattern remains of interest. Remains above its 200-day simple moving average. Fading downside price momentum supports the strategy.
Our profit target remains at $69 with a trailing stop-loss at $62.50. Exit the trade by 7 February 2025. |
A developing symmetrical triangle pattern remains of interest. Remains above its 200-day simple moving average. Upside momentum supports the strategy.
Our profit target remains at $395 with a trailing stop-loss at $356.7. Exit the trade by 11 October 2024. |
A price action that is developing rising wedge pattern remains of interest. Crossed above its 200-day simple moving average. The start of upside price momentum supports the trade strategy.
Our profit target remains at $75 with a trailing stop-loss at $66.50. Exit the trade by 23 October 2024. |
| Share Name and position | HSY US - Buy (Continue to hold) | AVY US - Buy (Continue to hold) | SSY US - Buy (Continue to hold) |
|---|---|---|---|
| Entry | 192.67 | 212.51 | 75.19 |
| Current | 198.46 | 218.47 | 76.97 |
| Movement | +3.0% | +2.8% | +2.4% |
|
Price action above key long-term support remains of interest. Remains above its 200-day simple moving average. Upside momentum supports the strategy.
Our profit target remains at $215 with a trailing stop-loss at $190. Exit the trade by 1 November 2024. |
Price action remains of interest. Remains above its 200-day simple moving average. Fading downside price momentum supports the strategy.
Our profit target remains at $237 with a trailing stop-loss at $208.80. Exit the trade by 6 December 2024. |
A developing symmetrical triangle pattern remains of interest. Remains above its 200-day simple moving average. Upside price momentum halted, which is a concern to the trade strategy.
Our profit target remains at $84 with a trailing stop-loss at $73.65. Exit the trade by 6 November 2024. |
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