by winston » Tue Jul 16, 2019 8:48 am
not vested
Amazon
Just as Apple has seemingly been the no-brainer investment of the past decade, Amazon.com (NASDAQ:AMZN) looks to be the no-brainer growth opportunity you won't want to miss over the next decade. And yes, this takes into account that the company is already worth almost $1 trillion.
When most folks think of Amazon, they rightly think of its dominant retail platform. There's certainly nothing wrong with this impression of Amazon as it's a big reason the company has been able to generate significant sales and build up an incredible following through its Prime membership.
In the first quarter of 2019, $52 billion out of $59.7 billion in net sales was essentially derived from retail sales, either through its Amazon platform, its wholly owned grocery chain Whole Foods, or other means.
But what's particularly interesting about Amazon is that it's the company's cloud services for small-and-medium-sized businesses, Amazon Web Services (AWS), that's really the key to its future growth.
Not to belittle the importance of Amazon's monstrous e-commerce market share, or the loyalty that its Prime membership brings, but none of its retail operations can hold a candle to the margins AWS brings to the table.
Out of the aforementioned $52 billion in net sales from retail, Amazon logged operating income of $2.2 billion in the first quarter. But from just $7.7 billion in AWS sales, Amazon also logged $2.2 billion in operating income.
With AWS growing at a much faster pace than its traditional e-commerce business, AWS will continue to represent a larger percentage of sales over time, thereby improving margins, cash flow, and profitability.
Not surprisingly, Wall Street has forecast a near-tripling in cash flow per share for Amazon between 2018 ($61.45 per share) and 2022 ($178.40 per share).
In other words, AWS makes Amazon a much more reasonably valued stock than you probably realize.
Source: Motley Fool
It's all about "how much you made when you were right" & "how little you lost when you were wrong"