Hightower Advisors’ investment strategist Stephanie Link is passionately accumulating shares of Amazon.com Inc (AMZN), and she has a compelling reason for doing so. According to Link, the stock is currently trading at its most attractive valuation in years.
The Aesthetics of Valuation: In an appearance on CNBC’s “Fast Money Halftime Report,” Link articulated her bullish sentiments, “I like it a lot. It’s trading at 13 times EBITDA, and historically it’s traded at over 20 times EBITDA.”
Link’s strategy seems to hinge on Amazon’s versatility. She emphasizes the potential for acceleration in Amazon Web Services (AWS) growth, anticipating a surge from the 12% reported last quarter to an impressive 15% to 16% in the upcoming quarterly results and potentially even higher in the latter half of the year.
“They signed a whole bunch of new customers after the quarter closed so that’s why I think you are going to see an acceleration,” Link said.
Link acknowledges Amazon’s potential to bolster margins. The company’s retail margins are on an upward trajectory, offering further room for improvement, particularly as costs decrease.
She also noted that Amazon ramped up spending during the pandemic to meet fulfillment demand, but with that phase concluded, the company now possesses significant operating leverage. Link remarked, “And I think the consumer is on fire. Look at retail sales last week: 9.4% was online. So I think that they’re clearly continuing to see momentum.”
In addition, Amazon’s advertising revenues, which were lackluster last year, are expected to rebound in the coming years. Link asserted, “Probably for the whole sector, the whole FAANG complex of course, but I think that it’s underappreciated at Amazon.”
The investment landscape appears to be aligning with Link’s perspective. Wall Street analysts have also expressed a fervent preference for Amazon in 2024. Several members of the Halftime Report panel have vocalized their positive outlook for the Jeff Bezos-founded company.
Joe Terranova, from Virtus Investment Partners, indicated potential interest in acquiring Amazon stock when he rebalances the Virtus Terranova U.S. Quality Momentum ETF (JOET) next week.
Market Performance: Amazon shares have exhibited remarkable growth, surging by more than 60% over the past year. At the time of publication, the stock was up 0.74% at $157.18.
Photo: courtesy of Amazon.
