Amazon Is The Best Buffett Blue-Chip Bargain You Can Buy

Summary

Amazon has gone nowhere for 13 months, underperforming all other FAANG stocks by massive amounts.

Amazon’s earnings on October 28th are likely to be outstanding, and the price might still fall as much as 7%.

Rising long-term interest rates could create a short-term headwind for tech, and cause Amazon to trade flat for even longer.

None of these things matter to smart long-term investors, who have a chance to buy this Buffett blue-chip bargain at 20.8X cash flow. The last time it was this cheap in early 2016 investors made 520% in the next five years.

Today analysts expect 24% to 29% CAGR returns from Amazon over the next five years, and potentially 32% in the long-term. It’s risk-adjusted expected returns are almost 6X that of the S&P 500 making it as close to a perfect growth investment as exists on Wall Street, and the single best Buffett blue-chip bargain you can buy.

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Sezeryadigar/E+ via Getty Images Some Amazon (NASDAQ: AMZN ) investors have been frustrated by the stock’s going nowhere for 13 months. It’s been the worst FAANG stock by a wide margin. And to add insult to injury, this year’s tech corrections have seen AMZN punished more severely than tech in general. Amazon has a great track record of crushing earnings expectations, and many investors hope this might be the catalyst that finally sets the stock free to soar like its other tech brethren. Amazon reports earnings Thursday, October 28th, after the bell.

Actually, there are three reasons why Amazon might crash in the coming weeks. But relax, I’m not here to scare you, I’m here to prepare you to potentially back up the truck on the single best Buffett blue-chip bargain you can buy. Be greedy when others are fearful.” “When it’s raining gold, reach for a bucket, not a thimble.” “The stock market is designed to transfer money from the active to the patient.” – Warren Buffett Warren Buffett owns nearly $2 billion worth of Amazon, and I’ve invested nearly a quarter-million dollars and have another $61K in Amazon buys planned for retirement accounts by March. That’s because Amazon is the perfect combination of quality, growth, and value.

For a complete analysis of Amazon’s investment thesis, risk profile, growth outlook, valuation, and return potential, see this exclusive DK video report.

Today I want to briefly summarize why Amazon’s potential short-term correction is a Buffett blue-chip bargain buying opportunity you won’t want to miss. One that could help you retire rich, and stay rich in retirement.

Because while there are three reasons Amazon might fall in the short term, it remains one of the world’s best hyper-growth blue-chips and could make you fabulously rich. How rich? AMZN Total Returns Since 1998

(Source: Portfolio Visualizer)

Amazon has delivered very consistent 27% annualized returns over time and 31% since its IPO resulting in 386X inflation-adjusted returns since its IPO. That’s almost 100X better than the S&P 500.

And analysts are just as bullish about its long-term prospects today. Investment Strategy Yield LT Consensus Growth LT Consensus Total Return Potential Amazon 0.0% 31.8% 31.8% High-Yield 2.8% 11.2% 14.0% Value 2.1% 11.9% 14.0% High-Yield + Growth 1.7% 11.0% 12.7% Safe Midstream 6.1% 6.2% 12.3% Chinese Tech 0.3% 12.0% 12.3% Safe Midstream + Growth 3.3% 8.5% 11.8% Nasdaq (Growth) 0.7% 10.9% 11.6% Dividend Aristocrats 2.3% 8.9% 11.2% REITs + Growth 1.8% 8.9% 10.6% S&P 500 1.4% 8.5% 9.9% REITs 3.0% 6.9% 9.9% 60/40 Retirement Portfolio 1.7% 5.1% 6.8% (Source: Morningstar, FactSet Research)

So first let’s look at why Amazon might be about to suffer a short-term correction, and then I’ll show you why this is the best Buffett blue-chip bargain you can buy today. Reason 1: Amazon Is In An Aggressive Growth Phase

Amazon is famous for investing in future growth and not caring about short-term profitability. AMZN Growth Spending Consensus Forecast

Year SG&A (Selling, General, Administrative) R&D Capex Total Growth Spending Sales Growth Spending/Sales 2020 $28,677 $37,677 $35,046 $101,400 $386,064 26.27% 2021 $36,783 $55,460 $48,286 $140,529 $476,059 29.52% 2022 $42,611 $60,902 $46,231 $149,744 $563,746 26.56% 2023 $48,308 $66,996 $46,561 $161,865 $661,898 24.45% 2024 $51,913 $74,858 $50,178 $176,949 $738,870 23.95% 2025 $57,641 $82,417 $52,060 $192,118 $842,127 22.81% 2026 $64,584 $91,343 $54,462 $210,389 $976,085 21.55% Annualized Growth 14.49% 15.90% 7.62% 12.94% 16.72% -2.28% (Source: FactSet Research Terminal)

Right now Amazon is cracking up the growth engines to 11. In fact, analysts […]

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