Encounter the Beastly Equity Gaining Ground Unremittingly in the Market
As 2024 winds down, it's evident that one powerful stock continues to slip under the radar: Amazon (AMZN 0.76%). Despite its YTD gain of 37%, I believe the company is not receiving the recognition it deserves.
Let's dive deeper into Amazon and discover why this titanic stock is a name that investors ought to keep an eye on as we journey into 2025, and beyond.
Amazon boasts numerous strengths
The first important aspect to grasp about Amazon is its colossal size. With a market cap of $2.2 trillion and annual revenue around $600 billion, it claims the fifth-largest American company position by market cap and the second-largest by revenue.
Consequently, it's no wonder that Amazon houses several strong business segments that would stand on their own as impressive businesses if they were separate entities.
Consider Amazon Web Services (AWS), for instance. AWS now generates over $100 billion in annual revenue and boasts a 19% year-over-year growth rate. If it were an individual company, AWS would rank as the 33rd-largest American stock by revenue, just ahead of Tesla and Nvidia.
Amazon's advertising business is equally imposing. It raked in around $50 billion in sales during the last 12 months. If this sector were spun off as a separate company, Amazon's ad unit would rank among the top 100 American companies by revenue, boasting roughly the same annual sales as athletic powerhouse "Nike".
It's worth noting that Amazon's most famous business – its monumental e-commerce sector – generates nearly half a trillion dollars in revenue annually.
Although not all of Amazon's sections match the rapid growth and profitability they once exhibited, this diversified array of businesses constitutes one significant reason Amazon's stock continues to soar. Amazon has multiple avenues to triumph; should one segment encounter setbacks, the company frequently counteracts this with extraordinary performance in another segment.
Over time, this plethora of businesses helps the company present outstanding results and a higher stock price.
Amazon continues to thrive, delivering solid growth and profits
Ultimately, the key attribute that makes Amazon such a remarkable stock to own is its capacity to deliver increasing revenue and profits. Fortunately, investors can discern many positive indications that Amazon will maintain this trend going forward.
For instance, when examining the company's latest quarterly earnings report (for the three months concluding on Sept. 30, 2024), several aspects stand out:
- 11% total revenue growth
- $17.4 billion in operating income (an all-time high)
- $70.8 billion in 12-month free cash flow (an all-time high)
These three crucial financial indicators for any firm (revenue growth, operating income, and free cash flow) have never been higher for Amazon – with the exception of revenue growth, which has been higher in the past.
Taken together, these metrics reveal an essential narrative: Amazon's CEO Andy Jassy is effectively carrying out his vision and enhancing the company's efficiency, thus delivering higher profits and free cash flow. This is crucial as profits and free cash flow can be employed to render shareholder value through dividend payments, share buybacks, capital investment, and strategic acquisitions.
Investors should take note: Amazon is performing at, arguably, its best-ever level. And for a stock that has soared over 1,000% over the past decade, that's a powerful testament.
Given the text, here are two sentences that contain the words 'finance', 'money', 'investing':
- Investors looking for opportunities in finance and money might want to consider Amazon, given its impressive annual revenue of around $600 billion and its YTD gain of 37%.
- With its vast size and diverse business segments, Amazon provides a solid option for investors interested in long-term investing and capital growth, considering its consistent delivery of solid revenue and profits.
