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Our monthly Fire Best Buys Now are designed to highlight our team’s three favourite, most timely Buys from our growing list of growth-focused Fire recommendations, to help Fools build out their portfolios.
“Best Buys Now” Pick #1:
Amazon (NASDAQ:AMZN)
- Amazon’s near 40% share price slump in the last 12 months presents a great opportunity for investors to buy a long-term winner. It’s a much larger business with much higher core earnings power than in 2020, yet we’re able to buy the shares today at the same prices as nearly three years ago.
- It continues to invest heavily in its future, particularly in Prime Video content (Lord of the Rings: Rings of Power and NFL Thursday Night Football premiered in Q3 2022), technology infrastructure to support the rapid growth of Amazon Web Services (AWS), and global fulfilment infrastructure to expand capacity in new geographies.
- Although management cut forward revenue growth guidance for Q4 2022 from 15% to 5%, the ubiquitous ‘everything’ company remains a dominant name in the massive e-commerce and cloud services markets, and with its heavy investments to maintain its competitive position, it doesn’t look as if the end of that is in sight.
- AWS continues to grow strongly and is highly profitable, allowing Amazon to weather the current macroeconomic climate and emerge stronger through the other side once the cycle turns.
- Growth is slowing but the business continues to generate substantial cash flow, and with stock prices at three-year lows and valuation multiples (price-to-book and price-to-sales) at levels not seen in roughly a decade, we have a healthy margin of safety with our investment.
