1 Growth Stock Down 12% to Buy Right Now

There haven’t been many, if any, businesses that have grown as fast as Amazon (AMZN 0.52%) has. The company’s 2023 revenue of $575 billion was a phenomenal 108 times what it was 20 years earlier. This is clearly a growth-focused enterprise, even at its current scale.

As of this writing, Ecommerce and cloud computing was trading 12% off its all-time high since early July this year. Here’s why this creates a great opportunity to buy this growth stock.

Financial performance

Amazon has no shortage of growth levers that it will continue to benefit from. Most investors are familiar with the company’s monster success in the e-commerce niche. In the US, 38% of all online spending goes through Amazon.com.

The growth of streaming entertainment is another tailwind benefiting the business. Amazon Prime is popular because it offers shoppers fast and free shipping. However, consumers also have access to a vast library of shows and movies. In terms of TV viewing time in the US, the video service is just behind Alphabeton YouTube and Netflix. More household cord cutting will keep engagement high.

Essentially, the advent of the internet and all things digital is the key driver for this business and will continue to be the case going forward. This is also true for other prominent segments such as global leader Amazon Web Services (AWS). cloud computing platform. With an operating margin of 35.5% in the second quarter, AWS was a major profit driver.

Given how much website traffic Amazon.com gets, it’s also a budding player in digital advertising, posting $12.8 billion in Q2 revenue in that area. That’s a 20% increase from a year ago. According to Insider Intelligence, Amazon is stealing share from the heavyweights that are Alphabet and Meta platforms.

Amazon has historically been known for impressive top-line growth. But investors can now be excited about its rising profitability. CEO Andy Jassy and his team focused on cutting expenses from 2022, laying off tens of thousands of people and working to reduce what critics believed was a bloated cost structure.

Operating income nearly doubled last quarter to $14.7 billion. Credit is given for sales and marketing and general and administrative expenses which have decreased year over year.

Amazon rating

There is no doubt that Amazon is one of the most followed companies on planet Earth. Everyone knows what a dominant company it is. But the stock is not expensive by any means.

Shares are traded at a the price-to-sales ratio from 3.1. This represents a reduction from its final five- and 10-year averages. This seems like a very reasonable entry point for potential investors.

According to Wall Street consensus analyst estimates, Amazon is expected to grow revenue and earnings per share at compound annual rates of 11% and 37%, respectively, between 2023 and 2026. It’s always a good idea to take these forecasts with a grain of salt. a grain of salt. , but this kind of optimistic outlook is very encouraging.

In addition to financial advantages, Amazon has many strong competitive strengths. It has valuable intangible assets, such as its highly regarded brand, as well as the treasure trove of data it is able to collect. The online market benefits from network effects. Amazon customers, whether merchants or AWS customers, undoubtedly have switching costs if they decide to use another service. Given the company’s massive size, it certainly has cost advantages across the board, especially with its logistics operations.

Don’t think too much about it. Amazon is a no-brainer growth stock to buy right now on the decline.