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Omar Venerio
Omar Venerio
Articles (1677) 

Ken Fisher Still Bullish on Amazon

Amazon is trading near its 52-week high of $580.57, surging roughly 68% year to date

September 09, 2015 | About:

Ken Fisher (Trades, Portfolio) increased his position in Amazon.com (NASDAQ:AMZN) by 2% to $1.08 billion or 2.49 million shares, according to the company's latest filing. Amazon is Fisher's tenth largest holding in his $51.4 billion portfolio. Fisher remains bullish on Amazon as evidenced by his increased position, Others including Andreas Halvorsen (Trades, Portfolio), Chase Coleman (Trades, Portfolio) and Robert Karr (Trades, Portfolio) also increased their stakes.

The company has strong growth potential, especially considering its active users growth at more than 20% compound annual growth rate in the past five years. Further, the growth is seen in total physical and digital units sold, as well as third-party units sold. The firm is constantly gaining market share with physical stores. Moreover, Amazon is capable of charging lower prices than rivals to offset competition.

In July, the online retailer posted better-than-expected results for the second quarter, but the third quarter guidance was not as promising. What happens in the next quarter is not as important, because Amazon Prime will be the key component for EPS growth. Despite this, we still believe Amazon is a nice bet for investors, considering that the company has a huge potential in international markets such as China and India.

The stock is trading near its 52-week high of $580.57, surging roughly 68% year to date and outperforming the industry. Moreover, Wall Street´s analysts are very optimistic, with two Sell ratings, five Hold ratings, 34 Buy ratings and one Strong Buy rating. The consensus 12-month target price is $603.32 with an upside potential of about 16.6% based on last closing price. However, the stock sells at a forward P/E ratio of 77.52x. To use another metric, its price-to-book ratio of 20.58x indicates a premium versus the industry median of 1.69x while the price-to-sales ratio of 2.52x is above the industry median of 0.65x, and it is close to five-year high of 2.61. The stock price has an upward trend in the five-year period. If you had invested $10,000 five years ago, today you could have $40,904, which represents a 32.6% compound annual growth rate.

Hedge fund gurus like Louis Moore Bacon (Trades, Portfolio), Steven Cohen (Trades, Portfolio) and Mario Gabelli (Trades, Portfolio) have taken long positions in the stock as well as RS Investment Management (Trades, Portfolio) and PRIMECAP Management (Trades, Portfolio).

Disclosure: Omar Venerio holds no position in any stocks mentioned

About the author:

Omar Venerio
Omar Venerio is a capital markets, derivatives, corporate finance and financial management professor and Area Head of Finance. He is passionate about the stock market and providing independent fundamental research and hedge fund and insider trading-focused investigation.

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