Today I’ll tell you why I invested in Amazon. And since the stock price has remained almost flat over the last few weeks, this time it might be the last chance before the rally.
THE 7 FILTERS
Now let’s get to your favorite part: the test of the 7 qualitative filters.
It’s a simple but essential test I use to evaluate whether a company is TRULY good, or just well-polished.
Revenue growth for 5 consecutive years? CHECK
Net income growth? CHECK
Free cash flow growth? CHECK
Healthy balance sheet with low debt? CHECK
Share buybacks? X – It issues new shares every year (a negative point)
Dividend vs FCF? It doesn’t pay a dividend – and that’s a good thing. CHECK
ROIC > 9%? CHECK – Currently at around 20%, which is considered excellent.
Total: 6 out of 7. And in fact, the only filter it doesn’t pass is manageable. It’s not a red flag.
WHY DOES THE STOCK REMAIN LOW?
Here’s where it gets interesting. Because although Amazon ($AMZN) is doing great in every respect, its stock hasn’t followed the same pace. So why is that? Two main reasons:
H-1B Visa Fee: Recently, Trump announced that companies hiring foreign workers with an H-1B visa will pay an additional $100,000 per person. The problem? Amazon ($AMZN) is the company with the most H-1B workers. But—and here’s the key—the new measure only applies to new hires, not existing ones. So practically, zero impact on Amazon’s ($AMZN) financials for now.
AWS slower growth: AWS is growing at +17%, compared to 30+% for Azure and Google Cloud. BUT (a) AWS is already twice the size of the other two, (b) it is the most stable and profitable cloud infrastructure worldwide, and (c) it has clients across all continents and industries.
So “slower” growth doesn’t mean bad performance. It means maturity.
GROWTH PROSPECTS
And now to the most exciting part—the reasons why I see MASSIVE growth ahead:
Distribution network: Competitors like Walmart, Shopify, and Shein are now using Amazon’s logistics network. If that’s not proof of quality, I don’t know what is.
Robotics: Over 1 million robots already in its warehouses. Soon they will outnumber humans. We’re talking about a revolution in cost and speed.
Robotaxi via Zoox: Amazon didn’t just enter the autonomous driving game. Zoox is bringing vehicles with no driver’s seat at all, already in final testing phases.
Combining all of the above, my personal forecast is crystal clear: $500 per share by 2030.
That’s more than doubling from current levels. And considering the growth rate of AWS and advertising, it could even go higher.
Posted Using INLEO