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teow0023
2021-09-03

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6 Reasons Amazon Is Set To Soar And Too Cheap To Ignore

Just because the market is 30% historically overvalued doesn't mean wonderful blue-chip bargains aren't plentiful.Today Amazon is 32% undervalued, and combined with high-yield blue-chips like BTI, offers 4% safe yield, and 17.6% CAGR long-term growth consensus, along with a 41% discount to fair value.In other words, income investors should harness the power of maximum safe yield and growth at a reasonable price to achieve the rich retirement they deserve.Amazon is perhaps the greatest growth sto

6 Reasons Amazon Is Set To Soar And Too Cheap To Ignore

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{"i18n":{"language":"zh_CN"},"data":{"magic":2,"id":812465612,"tweetId":"812465612","gmtCreate":1630609730636,"gmtModify":1631891427202,"author":{"id":3574379362062891,"idStr":"3574379362062891","authorId":3574379362062891,"authorIdStr":"3574379362062891","name":"teow0023","avatar":"https://static.tigerbbs.com/65fec6733e2cc640e16afc0ce4c21f79","vip":1,"userType":1,"introduction":"","boolIsFan":false,"boolIsHead":false,"crmLevel":3,"crmLevelSwitch":0,"individualDisplayBadges":[],"fanSize":5,"starInvestorFlag":false},"themes":[],"images":[],"coverImages":[],"extraTitle":"","html":"<html><head></head><body>Like!</body></html>","htmlText":"<html><head></head><body>Like!</body></html>","text":"Like!","highlighted":1,"essential":1,"paper":1,"likeSize":2,"commentSize":0,"repostSize":0,"favoriteSize":0,"link":"https://laohu8.com/post/812465612","repostId":1127482989,"repostType":2,"repost":{"id":"1127482989","pubTimestamp":1630301505,"share":"https://www.laohu8.com/m/news/1127482989?lang=&edition=full","pubTime":"2021-08-30 13:31","market":"us","language":"en","title":"6 Reasons Amazon Is Set To Soar And Too Cheap To Ignore","url":"https://stock-news.laohu8.com/highlight/detail?id=1127482989","media":"seekingalpha","summary":"Just because the market is 30% historically overvalued doesn't mean wonderful blue-chip bargains aren't plentiful.Today Amazon is 32% undervalued, and combined with high-yield blue-chips like BTI, offers 4% safe yield, and 17.6% CAGR long-term growth consensus, along with a 41% discount to fair value.In other words, income investors should harness the power of maximum safe yield and growth at a reasonable price to achieve the rich retirement they deserve.Amazon is perhaps the greatest growth sto","content":"Summary\n<ul>\n <li>Just because the market is 30% historically overvalued doesn't mean wonderful blue-chip bargains aren't plentiful.</li>\n <li>Today Amazon is 32% undervalued, and combined with high-yield blue-chips like BTI, offers 4% safe yield, and 17.6% CAGR long-term growth consensus, along with a 41% discount to fair value.</li>\n <li>In other words, income investors should harness the power of maximum safe yield and growth at a reasonable price to achieve the rich retirement they deserve.</li>\n <li>Amazon is perhaps the greatest growth story in history, and by 2026 analysts expect it to potentially become the first $1 trillion sales. In the next five years, analysts think Amazon could potentially quadruple to $12,800 per share.</li>\n <li>Nearly $600 billion in cash within five years, combined with over $160 billion in annual free cash flow, makes it very likely that Amazon will eventually launch the greatest capital return in history, including a rapidly growing dividend and buybacks that put Apple to shame.</li>\n</ul>\nThe market is currently climbing a wall of worry: the global Delta surge, slowing economic growth forecast, the Fed's taper (which is expected to start this fall and last 8-10 months), and the debt ceiling deadline (which Moody's estimates is mid-October).\nIt's critical that you stay calm and stick with your long-term investing plan. Delta could push back the economic reopening but isn't expected to stop it.\n<img src=\"https://static.tigerbbs.com/99b29fa8467f59dc784c37023437df12\" tg-width=\"640\" tg-height=\"539\" referrerpolicy=\"no-referrer\"><img src=\"https://static.tigerbbs.com/9a61378d9bd0c06cbe6797edcd6aa0df\" tg-width=\"640\" tg-height=\"568\" referrerpolicy=\"no-referrer\">\nThe debt ceiling crisis is expected to be averted. When they return in September, the House and Senate are expected to make progress on two massive infrastructure bills.\nIf those bills pass, Moody's estimates we'll see 6.7% growth this year, 5.3% growth in 2022, 3.5% growth in 2023, and 2.8% growth through 2031.\nProductivity has also been rising, thanks to massive increases in tech spending and capital expenditure for stay-at-home workers. Most economists expect at least 1.7% productivity growth in the next decade and some over 2%.\n<img src=\"https://static.tigerbbs.com/3480f7612363871c47848f534baa3233\" tg-width=\"640\" tg-height=\"407\" referrerpolicy=\"no-referrer\"><img src=\"https://static.tigerbbs.com/a710cca36611a4e06220130a3ca4e82f\" tg-width=\"640\" tg-height=\"428\" referrerpolicy=\"no-referrer\">\nThese are all positives for economic and corporate fundamentals, which bodes well for quality blue-chips, especially hyper-growth names like Amazon(NASDAQ:AMZN).\nSince releasing Q2 earnings, Amazon has suffered a modest correction. This is a historically volatile company—it’s suffered through numerous corrections and bear markets on the way to creating life-changing wealth.\n<img src=\"https://static.tigerbbs.com/5c7ff8f57f035424eb6666b509c98ab6\" tg-width=\"640\" tg-height=\"392\" referrerpolicy=\"no-referrer\">\nI've bought Amazon 113 times in total across my retirement portfolios, totaling about $250,000.\n<img src=\"https://static.tigerbbs.com/90e1890a3adfef0bed8899f9577b2af6\" tg-width=\"640\" tg-height=\"161\" referrerpolicy=\"no-referrer\">\n(Source: Morningstar) I own 79 total Amazon shares including in my Roth IRA and 401K\nI'm basically flat on the company so far… but I’m not worried at all. The longer Amazon trades flat while growing like a weed, the more deeply undervalued shares I can accumulate.\nIf your goal is to build a large position in Amazon over time, then 18 to 24 month periods of flat returns are the greatest gift the market can give you.\nI’ve even set opportunistic limits in case this current correction continues.\nReal Money Amazon Phoenix Limits\n<img src=\"https://static.tigerbbs.com/32f390e5737a6434af6be67497902fa2\" tg-width=\"640\" tg-height=\"106\" referrerpolicy=\"no-referrer\">(Source: Dividend Kings Phoenix Limit Tool)\nI always buy high-yield blue chips (like BTI) in addition to Amazon so I enjoy a generous, safe, and growing income.\nWhy not just buy 100% Amazon? Why bother combining it with high-yield blue-chips? Because during its 18 to 24 month flat periods, market envy can cause even long-term investors to potentially make costly mistakes.\n<img src=\"https://static.tigerbbs.com/c3b67a27ee4e45ad82bc7545b607cd13\" tg-width=\"640\" tg-height=\"390\" referrerpolicy=\"no-referrer\">\nHow does it feel to own Amazon when its flat for a year while the market is up 39% and tech stocks are up 41%?\nBuying Amazon with an equal amount of BTI means a 4.1% yield, 17.6% growth consensus, and a mouthwatering 41% discount to fair value. Analysts expect BTI and Amazon to deliver nearly 22% long-term returns in the future.\nAMZN + BTI Since 1998 (Annual Rebalancing)\n<img src=\"https://static.tigerbbs.com/ebd714408154883946ad82ee1b4626e6\" tg-width=\"640\" tg-height=\"289\" referrerpolicy=\"no-referrer\">\n(Source: Portfolio Visualizer)\nAMZN + BTI has made investors millionaires and can still do so in the coming years and decades.\nBy combining high yield blue-chips with hyper-growth at an attractive price, you can have your dividend cake and eat it, too.\nSo let's take a look at the six reasons why Amazon is set to soar, and too cheap to ignore.\nReason One: As Close To A Perfect Hyper-Growth Investment As Exists On Wall Street\nLooking at its investment decision score, Amazon has incredible 18% five-year risk-adjusted expected returns thanks to that 33% discount to fair value. And that's compared to 3.5% for the S&amp;P 500, nearly six times the market's risk-adjusted expected returns.\n<img src=\"https://static.tigerbbs.com/b51fa4ccefa3a34806019bba340fc93b\" tg-width=\"615\" tg-height=\"412\" referrerpolicy=\"no-referrer\"><img src=\"https://static.tigerbbs.com/8aa9fe47a590acc46ba3e4e91d08948d\" tg-width=\"610\" tg-height=\"686\" referrerpolicy=\"no-referrer\">(Source: Dividend Kings Automated Investment Decision Tool)\nIt's a 100% A+ potential exceptional hyper-growth opportunity, as close to a perfect growth stock as you can buy in today's 30% overvalued market.\nReason Two: World-Class Fundamentals You Can Trust With Your Hard Earned Savings\nMy mantra is safety and quality first, and prudent valuation and sound risk management always. It's how I make every investment decision whether it be $200 or $200,000.\nThe principles of disciplined financial science are the same no matter much money you have to invest.\nAmazon Fundamentals\nBalance sheet score: 82% - 5/5 - very safe\nDependability score: 75% - 3/4 - very dependable\nQuality score: 79% - 11/12 Super SWAN (sleep well at night)\nLong-Term Risk Management Consensus: 46th industry percentile - average\n2021 average fair value:$3,820.81\n2022 average fair value:$5,390.48\n12-month blended forward harmonic average fair value:$4,847.13\nDiscount To Fair Value/Margin of safety: 32%\nDK rating: potential very strong buy\nYield: 0%\nLong-term growth consensus: 31.3%\nLong-term consensus total return potential: 31.3% (vs. 9.9% for the S&amp;P 500 and 11.2% aristocrats and 16.2% Nasdaq)\nFor more information about the safety and quality tool, that generates results like this, see thisfree video tutorial.\n<img src=\"https://static.tigerbbs.com/5e83ed15154192bb4f18239376e1a35e\" tg-width=\"616\" tg-height=\"615\" referrerpolicy=\"no-referrer\">(Sources: Morningstar, JPMorgan Asset Management, FactSet, Seeking Alpha)\nReason Three: Jaw-Dropping Growth Potential For Many Years To Come\nThe market freaking out over Amazon’s earnings, with speculation that it has hit peak growth in sales.\nThis is completely unjustified.\nSales were up 38% in 2020… expected up 23% in 2021... and still grow at double digits all the way out to 2026. It’s on track for 17% sales growth through 2026.\n<img src=\"https://static.tigerbbs.com/339fd8709031a933752b396c59395399\" tg-width=\"625\" tg-height=\"680\" referrerpolicy=\"no-referrer\">(Source: FAST Graphs, FactSet Research)\n<img src=\"https://static.tigerbbs.com/7cf1f49410da3548110b1c1b1e2ff00a\" tg-width=\"620\" tg-height=\"498\" referrerpolicy=\"no-referrer\">(Source: FactSet Research Terminal)\nFree cash flows took a major hit in the last quarter. But remember, free cash flow is what's leftover after running the business and investing in future growth. Last year, the company invested $101 billion in growth spending.\n<img src=\"https://static.tigerbbs.com/582aa687081efaccbfa6a1d4a57ddf5f\" tg-width=\"626\" tg-height=\"552\" referrerpolicy=\"no-referrer\">(Source: FactSet Research Terminal)\nThis year, it’s expected to invest $140 billion, and by 2026, $211 billion. That’s equivalent to the GDP of Greece.\nAnd that growth spending ultimately drops to the bottom line.\nNet sales were up 36% adjusted for currency. Operating income was up 73% in the most recent quarter, and net income was up 123%. These are incredible numbers for a company of this size.\nAmazon Web Services is expected to see 23% sales growth through 2026… and margins are expected to increase. Combined with advertising, this is the major reason for Amazon's growth thesis.\n<img src=\"https://static.tigerbbs.com/ae4188f00cdb86420c5110c117ed3d7e\" tg-width=\"618\" tg-height=\"559\" referrerpolicy=\"no-referrer\">(Source: FactSet Research Terminal)\nAmazon's hyper-growth is expected to continue thanks to the fact that its two fastest-growing businesses are AWS and advertising with operating margins of 30% and 75%, respectively, according to Piper Jaffrey.\n<img src=\"https://static.tigerbbs.com/86b1799ce378fe2b35c342b08c778e6f\" tg-width=\"627\" tg-height=\"658\" referrerpolicy=\"no-referrer\">(Source: FactSet Research Terminal)\nReturns on capital, already in the 72nd percentile among its peers, is expected to more than double to 53%. That would be 5.5x its peers, and quadruple the S&amp;P 500.\nAnd advertising is growing at 83% with 75% operating margins. This is a key driver for future profitability and hyper-growth to the bottom line.\nAmazon's long-term thesis is absolutely intact. Amazon is focusing on growth as it has for the last 20 years, during which investors have seen their money grow 394X, adjusted for inflation.\nAmazon Total Returns Since 1998\n<img src=\"https://static.tigerbbs.com/1eb2ee5d43db5522327d47f8473dd5cb\" tg-width=\"640\" tg-height=\"126\" referrerpolicy=\"no-referrer\"><img src=\"https://static.tigerbbs.com/0b330917fb5ca320b80ca265e8df03c9\" tg-width=\"640\" tg-height=\"287\" referrerpolicy=\"no-referrer\"><img src=\"https://static.tigerbbs.com/f16f5b605502987645083859b0c3a1ac\" tg-width=\"640\" tg-height=\"261\" referrerpolicy=\"no-referrer\"><img src=\"https://static.tigerbbs.com/13f686f25ff9b20aa94a7814ade17f17\" tg-width=\"640\" tg-height=\"288\" referrerpolicy=\"no-referrer\"><img src=\"https://static.tigerbbs.com/5218d4e54c12a05f45e8f97ca441d8bd\" tg-width=\"640\" tg-height=\"231\" referrerpolicy=\"no-referrer\">\n(Source: Portfolio Visualizer)\nThat's nearly 100X better real returns than the S&amp;P 500, despite seven bear markets and over a dozen corrections.\nFrom correction lows, we’ve seen returns as strong as 39% annually for 15 years, and over 40% for seven to 10 years.\nThat’s the power of harnessing Amazon's volatility when the market is upset at it for no good fundamental reason.\nReason Four: A Fortress Balance Sheet To Support Its Growing Empire\nAmazon has a low debt to EBITDA and a net cash balance sheet that’s expected to get even stronger over time. Interest coverage is expected to soar at 29% annually in the coming years.\n<img src=\"https://static.tigerbbs.com/48790ab0754b80c00988677a90f27dba\" tg-width=\"615\" tg-height=\"531\" referrerpolicy=\"no-referrer\">(Source: FactSet Research Terminal)\nThe bond market absolutely loves Amazon, willing to lend to the company for 39 years at just 2.9%.\n<img src=\"https://static.tigerbbs.com/1b370809802bf91a52f15881ace867a4\" tg-width=\"640\" tg-height=\"635\" referrerpolicy=\"no-referrer\">(Source: FactSet Research Terminal)\nCash is expected to grow at 55% annually to almost $600 billion… and net debt is expected to reach $544 billion net by 2026.\n<img src=\"https://static.tigerbbs.com/e2a66edbf0fbf7377a36c5b274d0f7fe\" tg-width=\"629\" tg-height=\"555\" referrerpolicy=\"no-referrer\">(Source: FactSet Research Terminal)\nBy 2024, net cash of $261 billion would be the largest in corporate history. This is why I'm confident Amazon will eventually have to buy back stock and pay dividends.\n<img src=\"https://static.tigerbbs.com/dd3d6b48705d7e24f50c212775dcbd55\" tg-width=\"638\" tg-height=\"604\" referrerpolicy=\"no-referrer\">(Source: FactSet Research Terminal)\nAmazon's free cash is expected to be so enormous, that if it wanted to, management could buy back $825 billion worth of stock over the next five years.\nThat's 51% of outstanding shares and potentially drive 13% annual higher growth per share.\nAMZN paying a 50% FCF dividend would still allow it to buy back $413 billion in stock buybacks, and payout $413 billion in dividends.\n<ul>\n <li>Jeff Bezos owns 10.3% of Amazon's stock</li>\n <li>$42.5 billion in potential dividends = $8.5 billion per year</li>\n <li>Bezos could fund his philanthropy, Blue Origins, and live like a king</li>\n <li>without ever selling another share</li>\n</ul>\nAmazon becoming a dividend growth blue-chip one day isn't speculation, it's a mathematical certainty if the company grows as expected.\nAmazon is still finding new worlds to conquer. And now it’s trying to break into health insurance and drug delivery—a $1.5 trillion market in the U.S. alone.\nOver the long-term analysts expect 31.3% long-term growth.\n<img src=\"https://static.tigerbbs.com/049f74d77e4d4a2957250f325b4e7a05\" tg-width=\"640\" tg-height=\"130\" referrerpolicy=\"no-referrer\">\n(Source: FactSet Research Terminal)\n<ul>\n <li>29.4% to 35.8% CAGR growth consensus range</li>\n</ul>\n<img src=\"https://static.tigerbbs.com/dd658819b2ca7b9229873f302a76e1c1\" tg-width=\"640\" tg-height=\"358\" referrerpolicy=\"no-referrer\"><img src=\"https://static.tigerbbs.com/6ffe8333521b97312b717e009135c6a6\" tg-width=\"640\" tg-height=\"352\" referrerpolicy=\"no-referrer\">\nSmoothing for outliers, the historical margins of error are 20% to the downside and 30% to the upside.\n<ul>\n <li>23% to 47% CAGR adjusted growth consensus range</li>\n</ul>\n<img src=\"https://static.tigerbbs.com/b962dd6ee8ab728c8ab0f18c675e9c0c\" tg-width=\"640\" tg-height=\"447\" referrerpolicy=\"no-referrer\">(Source: FAST Graphs, FactSet Research)\nReason Five: A Wonderful Company At A Wonderful Price\nA lot of people think Amazon must be overvalued. How can a stock that's trading at over $3,000 not be? For 20 years, investors consistently paid 24-26x operating cash flow. That means 25x cash flow is a conservative intrinsic value estimate for Amazon.\nIt’s currently trading at 20.5x forward cash flow—at a wonderful price given its quality and growth potential.\n<img src=\"https://static.tigerbbs.com/3b72952ee1b4a15cc5a60c321f0dd746\" tg-width=\"630\" tg-height=\"710\" referrerpolicy=\"no-referrer\"><img src=\"https://static.tigerbbs.com/61abc608e0333641989ba1c55b31fcbb\" tg-width=\"608\" tg-height=\"315\" referrerpolicy=\"no-referrer\">Based on the consensus estimates, we estimate it's worth $4,847 today on a 12-month forward basis. That's a 32% discount to fair value and 46% upside to fair value.\n<img src=\"https://static.tigerbbs.com/8b0b9a70eae7fb44288448dc6cd7e5ef\" tg-width=\"612\" tg-height=\"626\" referrerpolicy=\"no-referrer\">\nFor anyone comfortable with its risk profile, Amazon is a potentially very strong buy with exceptional short and long-term return potential.\nReason Six: Life-Changing Return Potential For Many Years To Come\nAccording to JPMorgan, the S&amp;P 500 is historically 30% overvalued—in other words, it has no upside potential in the next three years.\n<ul>\n <li>S&amp;P 500 2023 Consensus Total Return Potential</li>\n</ul>\n<img src=\"https://static.tigerbbs.com/2aabff3d1ef35c04922f07bb7c0babfa\" tg-width=\"640\" tg-height=\"453\" width=\"100%\" height=\"auto\">(Source: FAST Graphs, FactSet Research)\n<ul>\n <li>S&amp;P 500 2026 Consensus Total Return Potential</li>\n</ul>\n<img src=\"https://static.tigerbbs.com/f032484af5d3b15d5dd1bf92a76f2c24\" tg-width=\"640\" tg-height=\"446\" width=\"100%\" height=\"auto\">(Source: FAST Graphs, FactSet Research)\nConsensus returns over the next five years are also not that impressive.\nBut take a look at what analysts expect Amazon to realistically accomplish.\n<ul>\n <li>AMZN 2023 Consensus Total Return Potential</li>\n</ul>\n<img src=\"https://static.tigerbbs.com/39c9209bccdcc255be3443cb7a6ec92b\" tg-width=\"640\" tg-height=\"384\" width=\"100%\" height=\"auto\">(Source: FAST Graphs, FactSet Research)\n<ul>\n <li>AMZN 2026 Consensus Total Return Potential</li>\n</ul>\n<img src=\"https://static.tigerbbs.com/039daa165e48aed070269ca773d98f1f\" tg-width=\"640\" tg-height=\"396\" width=\"100%\" height=\"auto\">(Source: FAST Graphs, FactSet Research)\n<ul>\n <li>AMZN 2026 Consensus Total Return Potential (Average Fair Value, 30 OCF)</li>\n</ul>\n<img src=\"https://static.tigerbbs.com/8d4d62368b6ef5dc66c604e63e120608\" tg-width=\"640\" tg-height=\"400\" width=\"100%\" height=\"auto\">(Source: FAST Graphs, FactSet Research)\nIf Amazon grows as expected and trades at average historical fair value by the end of 2026 analysts expect it to be a nearly $13,000 stock by the end of 2026.\n29% CAGR Peter Lynch-like returns from this hyper-growth blue-chip bargain hiding in plain sight.\nOver the long-term analysts expect:\n<ul>\n <li>0% yield + 31.3% growth = 31.3% CAGR total return potential</li>\n <li>23% to 47% CAGR range</li>\n <li>vs 9.9% S&amp;P 500 and 11.2% aristocrats and 16.2% Nasdaq</li>\n</ul>\n<img src=\"https://static.tigerbbs.com/d9c6960b1467a45397aa33fa5d4eb328\" tg-width=\"619\" tg-height=\"658\" width=\"100%\" height=\"auto\">\nA single share of Amazon purchased today, could, with a long enough time horizon, fund a rich retirement all on its own.\nMy Bezos retirement plan is to live off a fraction of my post-tax future Amazon dividends.\n<ul>\n <li>in 50 years 79 shares of Amazon could be paying about $527,000 per year in inflation-adjusted dividends</li>\n <li>1 share could be paying about $6,667 per year</li>\n <li>3 shares of Amazon could match the average Social Security payment, in dividends, in the future</li>\n</ul>\n<img src=\"https://static.tigerbbs.com/0950b107d9441752c38c5661f9f68d60\" tg-width=\"611\" tg-height=\"555\" width=\"100%\" height=\"auto\">\nRisk profile: Why Amazon Isn't Right For Everyone\nThere are no risk-free companies and no company is right for everyone. You have to be comfortable with the fundamental risk profile.\nAMZN's Risk Profile Includes\n<ul>\n <li>global regulatory/political risk</li>\n <li>market share risk (1,056 major rivals)</li>\n <li>disruption risk</li>\n <li>M&amp;A risk</li>\n <li>supply chain disruption risk</li>\n <li>talent retention risk</li>\n <li>currency risk</li>\n <li>data breach risk</li>\n</ul>\n<img src=\"https://static.tigerbbs.com/c1db183682848ef6e79cb340377f5412\" tg-width=\"616\" tg-height=\"358\" width=\"100%\" height=\"auto\">(Sources: S&amp;P, Fitch, Moody's)\n<img src=\"https://static.tigerbbs.com/20cffedecdef0992c6989fb9c64c0972\" tg-width=\"618\" tg-height=\"347\" width=\"100%\" height=\"auto\">(Sources: MSCI, Morningstar, Reuters'/Refinitiv, S&amp;P)\nHow We Monitor AMZN's Risk Profile\n<ul>\n <li>50 analysts</li>\n <li>3 credit rating agencies</li>\n <li>7 total risk rating agencies</li>\n <li>57 experts who collectively know this business better than anyone other than management</li>\n</ul>\nBottom Line: Amazon Is Set To Soar And Too Cheap To Ignore\nJust because the market is 30% overvalued doesn't mean wonderful blue-chip bargains are still plentiful.\nAnd just because you're an income investor doesn't mean you can enjoy 3% to 5% safe yields and 12% to 20% growth by combining hyper-growth blue-chips like Amazon with high-yield blue-chips like BTI, ENB, or MO.\nIn 2021 and 2022, the US is likely to see the strongest economic growth in 40 years. And most economists expect massive infrastructure spending to drive a decade of stronger growth, that could result in corporate earnings growing at 12.5% CAGR.\nIn such a backdrop buying shares of the world's greatest companies at highly attractive valuations is exactly the kind of prudent disciplined financial science that can help you achieve the rich retirement of your dreams.","source":"seekingalpha","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>6 Reasons Amazon Is Set To Soar And Too Cheap To Ignore</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\n6 Reasons Amazon Is Set To Soar And Too Cheap To Ignore\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-08-30 13:31 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4452492-6-reasons-amazon-is-set-to-soar-and-too-cheap-to-ignore>seekingalpha</a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\nSummary\n\nJust because the market is 30% historically overvalued doesn't mean wonderful blue-chip bargains aren't plentiful.\nToday Amazon is 32% undervalued, and combined with high-yield blue-chips ...\n\n<a href=\"https://seekingalpha.com/article/4452492-6-reasons-amazon-is-set-to-soar-and-too-cheap-to-ignore\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"AMZN":"亚马逊"},"source_url":"https://seekingalpha.com/article/4452492-6-reasons-amazon-is-set-to-soar-and-too-cheap-to-ignore","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"1127482989","content_text":"Summary\n\nJust because the market is 30% historically overvalued doesn't mean wonderful blue-chip bargains aren't plentiful.\nToday Amazon is 32% undervalued, and combined with high-yield blue-chips like BTI, offers 4% safe yield, and 17.6% CAGR long-term growth consensus, along with a 41% discount to fair value.\nIn other words, income investors should harness the power of maximum safe yield and growth at a reasonable price to achieve the rich retirement they deserve.\nAmazon is perhaps the greatest growth story in history, and by 2026 analysts expect it to potentially become the first $1 trillion sales. In the next five years, analysts think Amazon could potentially quadruple to $12,800 per share.\nNearly $600 billion in cash within five years, combined with over $160 billion in annual free cash flow, makes it very likely that Amazon will eventually launch the greatest capital return in history, including a rapidly growing dividend and buybacks that put Apple to shame.\n\nThe market is currently climbing a wall of worry: the global Delta surge, slowing economic growth forecast, the Fed's taper (which is expected to start this fall and last 8-10 months), and the debt ceiling deadline (which Moody's estimates is mid-October).\nIt's critical that you stay calm and stick with your long-term investing plan. Delta could push back the economic reopening but isn't expected to stop it.\n\nThe debt ceiling crisis is expected to be averted. When they return in September, the House and Senate are expected to make progress on two massive infrastructure bills.\nIf those bills pass, Moody's estimates we'll see 6.7% growth this year, 5.3% growth in 2022, 3.5% growth in 2023, and 2.8% growth through 2031.\nProductivity has also been rising, thanks to massive increases in tech spending and capital expenditure for stay-at-home workers. Most economists expect at least 1.7% productivity growth in the next decade and some over 2%.\n\nThese are all positives for economic and corporate fundamentals, which bodes well for quality blue-chips, especially hyper-growth names like Amazon(NASDAQ:AMZN).\nSince releasing Q2 earnings, Amazon has suffered a modest correction. This is a historically volatile company—it’s suffered through numerous corrections and bear markets on the way to creating life-changing wealth.\n\nI've bought Amazon 113 times in total across my retirement portfolios, totaling about $250,000.\n\n(Source: Morningstar) I own 79 total Amazon shares including in my Roth IRA and 401K\nI'm basically flat on the company so far… but I’m not worried at all. The longer Amazon trades flat while growing like a weed, the more deeply undervalued shares I can accumulate.\nIf your goal is to build a large position in Amazon over time, then 18 to 24 month periods of flat returns are the greatest gift the market can give you.\nI’ve even set opportunistic limits in case this current correction continues.\nReal Money Amazon Phoenix Limits\n(Source: Dividend Kings Phoenix Limit Tool)\nI always buy high-yield blue chips (like BTI) in addition to Amazon so I enjoy a generous, safe, and growing income.\nWhy not just buy 100% Amazon? Why bother combining it with high-yield blue-chips? Because during its 18 to 24 month flat periods, market envy can cause even long-term investors to potentially make costly mistakes.\n\nHow does it feel to own Amazon when its flat for a year while the market is up 39% and tech stocks are up 41%?\nBuying Amazon with an equal amount of BTI means a 4.1% yield, 17.6% growth consensus, and a mouthwatering 41% discount to fair value. Analysts expect BTI and Amazon to deliver nearly 22% long-term returns in the future.\nAMZN + BTI Since 1998 (Annual Rebalancing)\n\n(Source: Portfolio Visualizer)\nAMZN + BTI has made investors millionaires and can still do so in the coming years and decades.\nBy combining high yield blue-chips with hyper-growth at an attractive price, you can have your dividend cake and eat it, too.\nSo let's take a look at the six reasons why Amazon is set to soar, and too cheap to ignore.\nReason One: As Close To A Perfect Hyper-Growth Investment As Exists On Wall Street\nLooking at its investment decision score, Amazon has incredible 18% five-year risk-adjusted expected returns thanks to that 33% discount to fair value. And that's compared to 3.5% for the S&P 500, nearly six times the market's risk-adjusted expected returns.\n(Source: Dividend Kings Automated Investment Decision Tool)\nIt's a 100% A+ potential exceptional hyper-growth opportunity, as close to a perfect growth stock as you can buy in today's 30% overvalued market.\nReason Two: World-Class Fundamentals You Can Trust With Your Hard Earned Savings\nMy mantra is safety and quality first, and prudent valuation and sound risk management always. It's how I make every investment decision whether it be $200 or $200,000.\nThe principles of disciplined financial science are the same no matter much money you have to invest.\nAmazon Fundamentals\nBalance sheet score: 82% - 5/5 - very safe\nDependability score: 75% - 3/4 - very dependable\nQuality score: 79% - 11/12 Super SWAN (sleep well at night)\nLong-Term Risk Management Consensus: 46th industry percentile - average\n2021 average fair value:$3,820.81\n2022 average fair value:$5,390.48\n12-month blended forward harmonic average fair value:$4,847.13\nDiscount To Fair Value/Margin of safety: 32%\nDK rating: potential very strong buy\nYield: 0%\nLong-term growth consensus: 31.3%\nLong-term consensus total return potential: 31.3% (vs. 9.9% for the S&P 500 and 11.2% aristocrats and 16.2% Nasdaq)\nFor more information about the safety and quality tool, that generates results like this, see thisfree video tutorial.\n(Sources: Morningstar, JPMorgan Asset Management, FactSet, Seeking Alpha)\nReason Three: Jaw-Dropping Growth Potential For Many Years To Come\nThe market freaking out over Amazon’s earnings, with speculation that it has hit peak growth in sales.\nThis is completely unjustified.\nSales were up 38% in 2020… expected up 23% in 2021... and still grow at double digits all the way out to 2026. It’s on track for 17% sales growth through 2026.\n(Source: FAST Graphs, FactSet Research)\n(Source: FactSet Research Terminal)\nFree cash flows took a major hit in the last quarter. But remember, free cash flow is what's leftover after running the business and investing in future growth. Last year, the company invested $101 billion in growth spending.\n(Source: FactSet Research Terminal)\nThis year, it’s expected to invest $140 billion, and by 2026, $211 billion. That’s equivalent to the GDP of Greece.\nAnd that growth spending ultimately drops to the bottom line.\nNet sales were up 36% adjusted for currency. Operating income was up 73% in the most recent quarter, and net income was up 123%. These are incredible numbers for a company of this size.\nAmazon Web Services is expected to see 23% sales growth through 2026… and margins are expected to increase. Combined with advertising, this is the major reason for Amazon's growth thesis.\n(Source: FactSet Research Terminal)\nAmazon's hyper-growth is expected to continue thanks to the fact that its two fastest-growing businesses are AWS and advertising with operating margins of 30% and 75%, respectively, according to Piper Jaffrey.\n(Source: FactSet Research Terminal)\nReturns on capital, already in the 72nd percentile among its peers, is expected to more than double to 53%. That would be 5.5x its peers, and quadruple the S&P 500.\nAnd advertising is growing at 83% with 75% operating margins. This is a key driver for future profitability and hyper-growth to the bottom line.\nAmazon's long-term thesis is absolutely intact. Amazon is focusing on growth as it has for the last 20 years, during which investors have seen their money grow 394X, adjusted for inflation.\nAmazon Total Returns Since 1998\n\n(Source: Portfolio Visualizer)\nThat's nearly 100X better real returns than the S&P 500, despite seven bear markets and over a dozen corrections.\nFrom correction lows, we’ve seen returns as strong as 39% annually for 15 years, and over 40% for seven to 10 years.\nThat’s the power of harnessing Amazon's volatility when the market is upset at it for no good fundamental reason.\nReason Four: A Fortress Balance Sheet To Support Its Growing Empire\nAmazon has a low debt to EBITDA and a net cash balance sheet that’s expected to get even stronger over time. Interest coverage is expected to soar at 29% annually in the coming years.\n(Source: FactSet Research Terminal)\nThe bond market absolutely loves Amazon, willing to lend to the company for 39 years at just 2.9%.\n(Source: FactSet Research Terminal)\nCash is expected to grow at 55% annually to almost $600 billion… and net debt is expected to reach $544 billion net by 2026.\n(Source: FactSet Research Terminal)\nBy 2024, net cash of $261 billion would be the largest in corporate history. This is why I'm confident Amazon will eventually have to buy back stock and pay dividends.\n(Source: FactSet Research Terminal)\nAmazon's free cash is expected to be so enormous, that if it wanted to, management could buy back $825 billion worth of stock over the next five years.\nThat's 51% of outstanding shares and potentially drive 13% annual higher growth per share.\nAMZN paying a 50% FCF dividend would still allow it to buy back $413 billion in stock buybacks, and payout $413 billion in dividends.\n\nJeff Bezos owns 10.3% of Amazon's stock\n$42.5 billion in potential dividends = $8.5 billion per year\nBezos could fund his philanthropy, Blue Origins, and live like a king\nwithout ever selling another share\n\nAmazon becoming a dividend growth blue-chip one day isn't speculation, it's a mathematical certainty if the company grows as expected.\nAmazon is still finding new worlds to conquer. And now it’s trying to break into health insurance and drug delivery—a $1.5 trillion market in the U.S. alone.\nOver the long-term analysts expect 31.3% long-term growth.\n\n(Source: FactSet Research Terminal)\n\n29.4% to 35.8% CAGR growth consensus range\n\n\nSmoothing for outliers, the historical margins of error are 20% to the downside and 30% to the upside.\n\n23% to 47% CAGR adjusted growth consensus range\n\n(Source: FAST Graphs, FactSet Research)\nReason Five: A Wonderful Company At A Wonderful Price\nA lot of people think Amazon must be overvalued. How can a stock that's trading at over $3,000 not be? For 20 years, investors consistently paid 24-26x operating cash flow. That means 25x cash flow is a conservative intrinsic value estimate for Amazon.\nIt’s currently trading at 20.5x forward cash flow—at a wonderful price given its quality and growth potential.\nBased on the consensus estimates, we estimate it's worth $4,847 today on a 12-month forward basis. That's a 32% discount to fair value and 46% upside to fair value.\n\nFor anyone comfortable with its risk profile, Amazon is a potentially very strong buy with exceptional short and long-term return potential.\nReason Six: Life-Changing Return Potential For Many Years To Come\nAccording to JPMorgan, the S&P 500 is historically 30% overvalued—in other words, it has no upside potential in the next three years.\n\nS&P 500 2023 Consensus Total Return Potential\n\n(Source: FAST Graphs, FactSet Research)\n\nS&P 500 2026 Consensus Total Return Potential\n\n(Source: FAST Graphs, FactSet Research)\nConsensus returns over the next five years are also not that impressive.\nBut take a look at what analysts expect Amazon to realistically accomplish.\n\nAMZN 2023 Consensus Total Return Potential\n\n(Source: FAST Graphs, FactSet Research)\n\nAMZN 2026 Consensus Total Return Potential\n\n(Source: FAST Graphs, FactSet Research)\n\nAMZN 2026 Consensus Total Return Potential (Average Fair Value, 30 OCF)\n\n(Source: FAST Graphs, FactSet Research)\nIf Amazon grows as expected and trades at average historical fair value by the end of 2026 analysts expect it to be a nearly $13,000 stock by the end of 2026.\n29% CAGR Peter Lynch-like returns from this hyper-growth blue-chip bargain hiding in plain sight.\nOver the long-term analysts expect:\n\n0% yield + 31.3% growth = 31.3% CAGR total return potential\n23% to 47% CAGR range\nvs 9.9% S&P 500 and 11.2% aristocrats and 16.2% Nasdaq\n\n\nA single share of Amazon purchased today, could, with a long enough time horizon, fund a rich retirement all on its own.\nMy Bezos retirement plan is to live off a fraction of my post-tax future Amazon dividends.\n\nin 50 years 79 shares of Amazon could be paying about $527,000 per year in inflation-adjusted dividends\n1 share could be paying about $6,667 per year\n3 shares of Amazon could match the average Social Security payment, in dividends, in the future\n\n\nRisk profile: Why Amazon Isn't Right For Everyone\nThere are no risk-free companies and no company is right for everyone. You have to be comfortable with the fundamental risk profile.\nAMZN's Risk Profile Includes\n\nglobal regulatory/political risk\nmarket share risk (1,056 major rivals)\ndisruption risk\nM&A risk\nsupply chain disruption risk\ntalent retention risk\ncurrency risk\ndata breach risk\n\n(Sources: S&P, Fitch, Moody's)\n(Sources: MSCI, Morningstar, Reuters'/Refinitiv, S&P)\nHow We Monitor AMZN's Risk Profile\n\n50 analysts\n3 credit rating agencies\n7 total risk rating agencies\n57 experts who collectively know this business better than anyone other than management\n\nBottom Line: Amazon Is Set To Soar And Too Cheap To Ignore\nJust because the market is 30% overvalued doesn't mean wonderful blue-chip bargains are still plentiful.\nAnd just because you're an income investor doesn't mean you can enjoy 3% to 5% safe yields and 12% to 20% growth by combining hyper-growth blue-chips like Amazon with high-yield blue-chips like BTI, ENB, or MO.\nIn 2021 and 2022, the US is likely to see the strongest economic growth in 40 years. And most economists expect massive infrastructure spending to drive a decade of stronger growth, that could result in corporate earnings growing at 12.5% CAGR.\nIn such a backdrop buying shares of the world's greatest companies at highly attractive valuations is exactly the kind of prudent disciplined financial science that can help you achieve the rich retirement of your dreams.","news_type":1},"isVote":1,"tweetType":1,"viewCount":205,"commentLimit":10,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"symbols":[],"verified":2,"subType":0,"readableState":1,"langContent":"EN","currentLanguage":"EN","warmUpFlag":false,"orderFlag":false,"shareable":true,"causeOfNotShareable":"","featuresForAnalytics":[],"commentAndTweetFlag":false,"andRepostAutoSelectedFlag":false,"upFlag":false,"length":5,"xxTargetLangEnum":"ORIG"},"commentList":[],"hasMoreComment":false,"orderType":2}