Amazon (AMZN) just lowered earnings estimates — again. Yet the stock keeps trending higher — again. Investors are really looking towards the future with this stock. Here’s a look at AMZN, a stock on my radar.
One Year Chart
This stock has been doing great in the last year. I love the upward pattern with corrections to knock out the weak investors. The stock keeps making higher-highs and lower-lows. I bet this is an institutional favorite. It seems like smart money owns this stock.
Wow, the P/E is 108. This year AMZN is building distribution centers overseas. The concept of spending now to get profits later worked here in the U.S. and management doesn’t mind taking a step back to take two steps forward later on. That’s why this stock is up — great things are in store in the next five years.
Unfortunately, the profit estimates keep declining. Look at this earnings table. 2011, 2012 and 2013 profit growth has dropped for three quarters.
Fair Value
AMZN is worth 45 times earnings to me (obviously more to other people). If we look ahead to 2012, AMZN is worth $145. AMZN was $215 when I compiled these charts and tables.
Bottom Line
This stock is way up there. I owned AMZN last year and sold it because I could see the financial impact of expansion. But the stock has went higher in the face of declining estimates.
I want to buy AMZN again, I just think I should wait until annual estimates start bumping higher in addition to a P/E in the 40s.
View the ten-year chart here.
