Amazon on Top of the World, With No Desire to Relinquish Position
If I had to invest in only one stock and wasn’t allowed to sell it, that stock would likely be Amazon.com, Inc. (NASDAQ:AMZN).
Amazon stock is the best of breed, regardless of whether the company operates in industrial, retail, technology, or whatever other sector.
Just think about it. When news surfaces about Amazon looking at expanding into a specific segment, the impact is generally negative for the established companies in that area.
Remember what happened when Amazon was rumored to be interested in the online pharmacy segment? Pharmacy stocks sold off on the speculation, despite there being no concrete evidence supporting the rumor. (Source: “Drugstore stocks tumble as Amazon considers selling prescription drugs online,” CNBC, October 6, 2017.)
That is because Amazon is massive, the biggest company in the world, with a market valuation that is once again approaching $1.0 trillion. Apple Inc. (NASDAQ:AAPL) had been the biggest company, prior to concerns regarding its heavy exposure to China. (Source: “Apple is the big tech firm most at risk from a US-China trade war,” CNBC, June 19, 2018.)
Chart courtesy of StockCharts.com
For its part, Amazon is much more of a diversified company than Apple is, and it has minimal exposure to China.
Amazon.com, Inc.’s technological prowess is based on developing artificial intelligence and machine learning applications to power its platform. Furthermore, the company’s “Amazon Web Services” is a top player in the cloud game.
Amazon is very rigorous in its strategies. If it doesn’t feel it can compete in a certain sector, the company will move on, as demonstrated by its recent decision to exit the ride-sharing business.
Even in the past, when the company was looking at the grocery business, instead of spending time and capital to build its own network, Amazon decided to buy Whole Foods Market.
The same could happen in another area that Amazon becomes interested in. This is why holding AMZN stock could be a great investment strategy.
It’s obvious that Amazon.com, Inc. is sitting at the top of the perch and I doubt any company can knock it off.
Walmart Inc (NYSE:WMT) has been making strides in its e-commerce business, but Amazon is simply too far ahead in that game and too big for even Walmart to compete against.
Target Corporation (NYSE:TGT) is another brick-and-mortar retailer trying hard to take business away from Amazon, but being roughly 20 times smaller than Amazon, it won’t be easy. Target just announced same-day delivery, but I doubt it will prove to be a real threat.
Of course, the government could enact regulatory changes to control the dominance of Amazon in the retail space. We know how President Donald Trump feels about Amazon CEO Jeff Bezos, but I doubt the company will be forced to break up.
If you could only have one stock in your portfolio, AMZN stock could be the best candidate for long-term success.