Amazon is one of the largest e-commerce and cloud computing companies in the world. It enables the sale of millions of products by companies and third parties across dozens of product categories including music, books, electronics, fashion, and numerous others.
Amazon also offers personalised shopping experiences and direct shipping to customers. Additionally, Amazon is a major player in the cloud computing space through Amazon Web Services (AWS), where it provides digital streaming and entertainment services, manufactures consumer electronics, manages a robust logistics and delivery network, and offers subscription-based services like Amazon Prime. The company has also ventured into grocery retail with the acquisition of Whole Foods Market.
Technically, a price that is developing a megaphone pattern makes the stock an attractive investment opportunity (see the black diverging trendlines on the main chart).
The pattern is formed by price swings that widen over time, creating the shape of a megaphone or an inverted cone. This pattern typically consists of higher highs and lower lows, making a pattern of increasing volatility. The megaphone pattern's upper and lower boundary lines represent areas of potential support and resistance. In a bullish scenario, the lower boundary (support) holds firm while the price makes higher highs and eventually breaks out above the upper boundary (resistance). The breakout can signal the continuation of the bullish trend.
According to the RSI (Relative Strength Index), the stock will be overbought at ~$200, which is also the level at which we consider a realistic profit target.
We suggest a medium capital at-risk allocation to this trade.
Share Information
| Share Code | AMZN |
|---|---|
| Industry | Retailing |
| Market Capital (USD) | 1430.44 billion |
| One Year Total Return | 55.01% |
| Return Year-to-Date | 64.79% |
| Current Price (USD) | 138.42 |
| 52 Week High (USD) | 145.86 |
| 52 Week Low (USD) | 81.43 |
| Financial Year End | December |
| The share already made strong gains year-to-date. Several technical indicators suggest further upside price momentum. The share is testing its 200-day simple moving average of ~$137. |
Consensus expectations
(Bloomberg)
| FY22 | FY23E | FY24E | FY25E | |
|---|---|---|---|---|
| Headline Earnings per Share (USD) | 2.52 | 3.44 | 4.28 | 5.42 |
| Growth (%) | 36.47 | 24.72 | 26.49 | |
| Dividend Per Share (USD) | - | - | - | - |
| Growth (%) | - | - | - | |
| Forward PE (times) | 40.30 | 32.31 | 25.54 | |
| Forward Dividend Yield (%) | - | - | - | |
| Solid earnings growth is expected over FY23. The stock holds a Beta of 1.1, which indicates that it is slightly more volatile relative to the overall stock market. | ||||
Buy/Sell Rationale
Technical Analysis:
Long-term fundamental view:
| Share Name and position | MSFT - Buy (Continue to hold) |
AMT - Buy (Continue to hold) |
KO - Buy (Continue to hold) |
|---|---|---|---|
| Entry | 331.32 | 178.19 | 55.78 |
| Current | 348.32 | 184.15 | 57.09 |
| Movement | 5.1% | 3.3% | 2.3% |
|
The development of a bullish flag pattern remains of interest. The stock is trading above its 200-day simple moving average. Fading downside momentum provides further support.
Our profit target is $365 with a trailing stop-loss at $335. Exit the position around 12 January 2024. |
Price symmetry remains of interest. The stock remains just below its 200-day moving average and the trade idea is regarded as a counter-trend strategy. The start of upside price momentum is a plus.
Our profit target is $205 with a trailing stop-loss at $173. Exit the position around 24 January 2024. |
The price is rebounding from the lower range of an inclining linear regression channel pattern and remains of interest. The stock remains below its 200-day moving average but is approaching it. Fading downside momentum is supportive.
Our profit target is $61 with a trailing stop-loss of $55. Exit the position around 12 January 2024. |
| Share Name and position | GILD - Buy (Continue to hold) |
|---|---|
| Entry | 80.00 |
| Current | 81.23 |
| Movement | 1.5% |
|
The development of a bullish flag pattern remains attractive. Crossed above its 200-day simple moving average. Upside price momentum supports the trade idea.
Our profit target is $97 with a trailing stop-loss of $74. Exit the position on 19 April 2024. |
