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Amazon Unveils Its First Smartphone

As a dividend growth investor, the common belief is that companies not paying dividends don’t fit into a portfolio centered on dividend growth.

I beg to differ.

Numerous outstanding companies exist that currently don’t pay dividends and may not in the foreseeable future. Despite this, I choose to include the best of them in my portfolio due to their exceptional quality and substantial growth potential.





Amazon’s Potential: Bullish Forecast or Regulatory Risks?

A Potential Bullish Future for Amazon Despite Regulatory Risks

Stirring anticipation as the year draws to a close, Amazon’s expected earnings per share (EPS) of $1.41 in the next four quarters appears plausible. This outlook points to a total FY24 EPS of $3.73, igniting optimism among investors and enthusiasts alike.

Fueling this optimism is a bold belief that Amazon could potentially surpass the estimated EPS of $3.49 in FY24. This audacious projection is rooted in the rapid advancements in artificial intelligence driving growth and a robust expansion anticipated in both Amazon Web Services (AWS) and the retail business, fortified by the Federal Reserve’s rate cuts.

The current stock price standing at $153 denotes a forward PE ratio of 41x based on the expected FY24 EPS of $3.73, well below historical norms, amplifying the allure of a potential bullish upturn.

With an anticipated 38.6% EPS growth from FY23 to FY24 and no signs of faltering growth due to enhanced operational efficiency, the proposal on the table suggests a stock valuation of approximately 60x its forward earnings, underpinning the potential growth trajectory.

Fiscal Year 2024 2025 2026 2027 2028
Revenue (b) $ 636.3 $ 710.1 $ 792.1 $ 877.6 $ 976.5
Revenue Growth 11.5% 11.6% 11.5% 10.8% 11.3%
EPS $ 3.7 $ 4.7 $ 6.1 $ 7.5 $ 9.2
EPS Growth 38.6% 25.2% 30.4% 23.6% 22.7%
Forward PE 60.0 55.0 55.0 50.0 45.0
Stock Price $ 224 $ 257 $ 335 $ 377 $ 416



The prospect of a persistent EPS growth in the upcoming years is compelling. Projections from 2025 to 2028 suggest an average EPS growth of approximately 25.5%. Nonetheless, foresight paints a potential tightening in valuation towards 45x its forward earnings by 2028, possibly pointing to a stock price of $416.

Unquestionably, the path forward seems heavily bullish. Yet, it’s crucial to acknowledge the myriad of risks that could potentially impede the envisioned valuation expansion.

That being said, there’s an unwavering belief that Amazon is presently trading at a bargain compared to its historical valuation. This belief is predicated on the expectation of robust EPS growth and the company’s transition into a new phase characterized by remarkable enhancements in operational efficiency, fortifying the bottom line of the business.

Furthermore, on Wall Street’s 2024 top-pick lists, Amazon is unapologetically in the spotlight:

Crucially, Amazon braces itself for potentially its most pivotal legal battle to date. Regulators are spotlighting the company’s market dominance, hinting at substantial scrutiny looming over Amazon in the years ahead.

The FTC’s allegation of leveraging its market authority to inflate prices and overcharge merchants has stirred profound unease.

In an October 3 client note, JPMorgan underscored that the lawsuit “was largely expected, and around the corner, anticipates challenges in establishing that AMZN unlawfully maintains monopoly power.”

Simultaneously, the specter of an economic downturn could dampen Amazon’s growth, impacting both its retail and AWS businesses. This looming risk persists, even if the Fed orchestrates a soft landing in 2024, while the GDP contracts more than expected.

Amidst a tumultuous 2022, Amazon has resurged, soaring by a staggering 83% year-to-date.

This resurgence isn’t driven by market hype or hysteria; instead, the company is firing on all cylinders, experiencing recuperation and growth across AWS, Retail, and Advertising sectors.

With bated breath, it’s anticipated that Amazon will harness this momentum, marking 2024 as the onset of a new epoch centered on operational efficiency, paving the way for substantial profitability.

Notably, the valuation currently resides below historic averages. With anticipated rate cuts in 2024, amplified valuation expansion is on the horizon, leading to an optimistic price target of $220 by the end of 2024, alongside further growth potential.

While a multitude of businesses vie for attention, Amazon stakes a spot among my top 5 picks for 2024. The forecast portends a momentous rally and substantial appreciation for the company.