Retail is amongst one of the best markets for long-term investment, known for its consistent growth. The industry ranges from grocery to e-commerce, consumer tech, and relatively more, allowing stockholders to learn from the tailwinds of dozens of sugments. The reality is, the worldwide retail market hit a valuation of $27 trillion in 2022 and is projected to rise to $30 trillion this 12 months.
Costco (NASDAQ: COST) has enjoyed immense success throughout the industry, with its shares up 248% since 2019. The company’s wholesale business model has won over consumers in greater than a dozen countries and has an exciting outlook since it continues to expand.
Nevertheless, it’s hard to take into consideration Costco’s stock when Amazon (NASDAQ: AMZN) also exists. The company is the world’s second-biggest retailer (only after Walmart) and is the No. 1 name in e-commerce. Furthermore, Amazon’s diverse business model has seen it gain a robust position in tech, with a primary 31% market share throughout the $626 billion cloud market.
This chart shows Amazon’s stock significantly outperforming Costco’s over the past 12 months. Meanwhile, various growth catalysts in retail and tech will likely keep the company on its current trajectory.
So forget Costco. This growth stock may thoroughly be poised for a bull run.
Amazon has proven resilient when faced with macroeconomic headwinds
An economic downturn in 2022 caused a market-wide sell-off that saw the Nasdaq Composite plunge 33% in the middle of the 12 months. Retail corporations were hit particularly hard as inflation spikes forced consumers to cut discretionary spending. For this reason, shares in Amazon fell 50% in 2022 alongside steep profit declines in its e-commerce segments.
Nevertheless, the company has made a formidable recovery since then, proving its reliability and resilience. In fiscal 2023, Amazon’s revenue rose 12% 12 months over 12 months to $575 billion, while operating income tripled to $37 billion.
A variety of cost-cutting measures and easing inflation bolstered the company’s e-commerce business and has seen its free money flow skyrocket 904% to $32 billion throughout the last 12 months.
Amazon’s performance over the past 12 months highlights the importance of investing with a long-term mindset. Investors who sold the company’s stock in 2022 won’t have benefited from its significant growth since then.
The retail giant has shown it could possibly successfully navigate macroeconomic headwinds, making its shares a fantastic long-term buy. Meanwhile, its considerable money reserves indicate it has the financial resources to proceed expanding and investing in high-growth industries like artificial intelligence (AI).
Earnings per share estimates indicate a big upside for Amazon’s stock
In dozens of countries, Amazon dominates e-commerce, a market expected to hit $3.6 trillion in 2024 and expand at a compound annual growth rate (CAGR) of 10% through 2028. The tech firm will likely proceed cashing in on the sector’s tailwinds for years.
Nevertheless, Amazon’s biggest growth catalyst is well its cloud platform, Amazon Web Services (AWS). In Q4 2024, revenue from the platform rose 13% 12 months over 12 months to $24 billion. Meanwhile, AWS was answerable for 54% of the company’s operating income, despite earning the underside portion of revenue between its three segments.
Moreover, AWS gives Amazon a lucrative role in AI, a market projected to expand at a CAGR of 37% through 2030. Since the world’s biggest cloud service, AWS has the potential to leverage its massive cloud data centers and steer the generative AI market.
Amazon has entered the market by adding a wide range of AI tools to AWS and unveiling a modern AI shopping assistant called Rufus on its retail site.
The tech giant is on an exciting growth path, and earnings per share (EPS) estimates reflect its significant potential.
This table shows Amazon’s EPS could hit nearly $7 per share over the next two fiscal years. When multiplying that figure by the company’s forward price-to-earnings ratio of 42, you achieve a stock price of $294. Considering its current position, these projections would see Amazon’s share price rise 69% by fiscal 2026.
Combined with a reliable business model and solid positions in e-commerce and AI, Amazon is a greater option than Costco and will thoroughly be poised for a bull run.
Do you have got to take a position $1,000 in Amazon immediately?
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Idiot’s board of directors. Dani Cook has no position in any of the stocks mentioned. The Motley Idiot has positions in and recommends Amazon, Costco Wholesale, and Walmart. The Motley Idiot has a disclosure policy.
Forget Costco: This Growth Stock Is Poised for a Potential Bull Run was originally published by The Motley Idiot