Lentini explains that when analyzing accounting ratios, Amazon knew how to have a price/earnings ratio (PER, in English) from 300 last year and is currently at 50, already much more in line with its history and its competitors. This means that the giant is trading at 50 times its earnings, which also means that we must have the company in our portfolio for more or less 50 years, “at current profit levels” recover the investment.
It is for this reason that none of the analysts of cnn suggests selling and they expect a 12-month price between US$180 and US$353, this implies -according to the specialist- an increase from 0 to 95%. For Lentini, the key level to overcome for sustained momentum is in the $190. Today Amazon’s stock is trading at US$181.21 and in the last six months it has risen 23.4%.
In that same line it is expressed Federico Victoriocofounder of Andean Investments (IA), who says that it shouldn’t be strange to see Amazon trading at all-time highs, “because it is totally consistent with the exponential growth of the company in recent years.” This is because it not only achieved a very interesting diversification of its business model, “but also because it is a revenue generating machine, even with a growth rate higher than the industry average“. To give you an idea, since the third quarter of 2022, earnings per share have continuously exceeded analyst expectations.
Amazon: upside potential
Juan Pablo Iacarusoanalyst Equity SBS Group, Maintains that “Amazon has all the potential to continue growing“. For the analyst, said growth will be tied to the performance of two key sectors: “Firstly, we find advertising whose performance continues to be surprising.” Secondly, he mentioned that it continues to be a leader in the world “cloud“, where it seeks to improve its performance with products such as Amazon Qan assistant based on artificial intelligence that will support programmers.
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Victorio adds that, in general, amazon It is a good company to have in a long-term portfolio. Added to this is that the context for investing in variable income seems to be auspicious when analyzing the performance in 2024 of the S&P 500“but the reality is that if we analyze its valuation, today it is not reasonable to us“. From Andean Investments They propose a strategy that weights companies that offer attractive valuations and even more so considering a possible slowdown in the US economy, where somewhat more defensive sectors may be interesting. “Perhaps with a more dovish Federal Reserve towards 2025, we will surely see it more appropriate to add exposure to these types of sectors / industries in portfolios,” he maintains.
For Iacaruso, Although the outlook is good, amazon It is not risk-free, as competition with well-established companies within these sectors is fierce. “In the world of advertising you must compete against Google and Meta. Furthermore, it is still behind Microsoft when it comes to assistants based on artificial intelligence, although we must highlight that AWS has a greater presence in the market Cloud“.
So what is the strategy?
Lentini maintains that if you wanted to have an ideal purchase price produced by a correction, the US$150 It is interesting, since that is the support level of the trend line that began at the 2022 lows and, in addition, there is the 200-week moving average which for technical analysts is, “an important price level“.
And meanwhile? The advisor recommends waitingsince if the mentioned level is not broken, “it is very possible that we will see a price correction. Let us remember that it rose 130% in 18 months, and that does not happen every day.” It must also be taken into account that many Investment Funds raise optimistic “price targets” regarding the future value of the shares of Amazon, which makes some sense when analyzing its valuation. Let us remember that today it is trading 40% below its “fair value” and an annual growth of almost 22% is expected for this year, in its income.. For its part, the company enjoys good financial health and very reasonable debt ratios.
As for Cedar of Amazon in the local market, Victorio assures that in addition to the movement of the asset in the New York plaza, we must take into account the “effect of Cash with Liqui”, where the instrument will be able to capture the dynamics of the financial dollar while replicating the movements of the underlying asset listed on Wall Street. Nevertheless, It should be noted that this does not mean that it should be considered a hedging instrument.given that ultimately it is still a variable income instrument, designed for the long term and that, by nature, it’s volatile.
