The Unstoppable Amazon; Robust Cash Flow Will Continue To Drive Investments In New Business Lines
Amazon.com, Inc. (NASDAQ:AMZN)’s ability to innovate and grow market share in virtually any segment it desires is no secret.
Despite the company’s insane growth over the years, analysts at Tigress Financial Partners do not see it slowing down anytime soon.
According to analyst Ivan Feinseth, continued upside still exists for shares. “AMZN continues to drive value and growth across all business lines, especially retail where it’s competitive pricing advantage, increasing loyalty program and fulfillment capabilities combined with the higher margin growth of its web services and Echo IoT connected devices, will continue to fuel significant growth.”
Amazon’s acquisition of Whole Foods Market, Inc. (NASDAQ:WFM), which has served to be one of the hottest business stories of the year, will create new opportunities for grocery sales and fulfillment, says Feinseth (see his track record here).
“Amazon has determined that the best Whole Foods customers are also good Prime customers. Amazon’s value proposition is supply chain management and logistics and they can improve the process through their expertise, to drive down Whole Foods costs and selling prices,” Feinseth told Benzinga in an interview.
Amazon’s no-profit strategy has proven to be the catalyst that has made the company so revolutionary. A focus on long-term growth and grabbing market share in every industry it disrupts continues to be the focus, as opposed to near-sightedness short-term profitability, which was the norm before Jeff Bezos emerged.
Taking a no-profit strategy to a retail store like Whole Foods will undoubtedly disrupt the entire industry, posing the question: What does a retail store that does not have to turn a profit look like?
“Return on Capital and Economic Profit growth remains low as AMZN continues to invest its massive cash flow into new growth opportunities. We believe these near-term investments will eventually drive greater return on capital and economic profit growth over the long term,” concluded Feinseth.
Tigress Financial Partners reiterated its Buy rating on Amazon.
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