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Amazon ETFs in Focus After Longest Monthly Winning Streak Since 2011
As August ended, Amazon AMZN celebrated a noteworthy achievement. The e-commerce giant has capped off six successive months of stock price gains, marking its lengthiest run of monthly growth since July 2011, as quoted on Yahoo Finance.
Strong Month and Market Cap Surge
Amazon's stock concluded the month of August with a 3.2% increase, closing at $138. Over the course of its winning streak, the company has surged by an impressive $423.7 billion in market capitalization. While the AI boom has been the catalyst for such a spectacular rise, several other developments also aided the rally.
Shopify Partnership Sparks Momentum Lately
A significant catalyst behind Amazon's late-month surge was the revelation of its partnership with Shopify SHOP. The tech powerhouse unveiled an integration between its Buy With Prime app and Shopify, streamlining the process for sellers to connect Amazon's payments feature with their Shopify stores.
The integration with Shopify's vast merchant base, consisting of approximately 1.75 million merchants, enhances Amazon's standing. While overlap exists with Amazon's estimated 2.5 million marketplace sellers, this collaboration is expected to provide an incremental boost to sales volume.
Amazon observed a 25% rise in conversions on merchant sites using the Buy With Prime program, which began in April of the preceding year. Notably, Amazon's adoption of Prime among third-party sellers is currently at around 60%, indicating the potential for further expansion.
Upbeat Earnings & Guidance
In August, Amazon reported significant earnings surpasses across operating income, operating margins, and guidance. These results temporarily allayed concerns regarding slowing cloud growth. Amazon.com delivered second-quarter 2023 earnings of 65 cents per share against a loss of 20 cents per share recorded in the year-ago quarter. The adjusted earnings of 63 cents per share topped the Zacks Consensus Estimate by 85.3%.
Net sales of $134.4 billion rose 11% year over year. The figure exceeded management’s guided range of $127-$133 billion and surpassed the Zacks Consensus Estimate of $131.5 billion. For third-quarter 2023, Amazon expects net sales between $138 billion and $143 billion. The Zacks Consensus Estimate for net sales was pegged at $138.18 billion.
How Are Amazon’s Prospects?
Amazon has a Zacks Rank #1 (Strong Buy) and it is a growth and momentum stock. Amazon’s expected growth rate for current year is expected to be 214.08% versus the e-Commerce industry’s growth rate of 21.30% and the S&P 500’s growth rate of 8.78%. Amazon’s expected growth rate for next year is 38.12% versus the expected growth rate of 27.10% for the industry and 16.69% for the S&P 500.
What Does the Broker Rating Say?
Amazon currently has an average brokerage recommendation (ABR) of 1.14 on a scale of 1 to 5 (Strong Buy to Strong Sell), calculated based on the actual recommendations (Buy, Hold, Sell etc.) made by 39 brokerage firms. The current ABR compares to an ABR of 1.14 a month ago based on 39 recommendations.
Of the 39 recommendations deriving the current ABR, 34 are Strong Buy and four are Buy. Strong Buy and Buy respectively account for 87.18% and 10.26% of all recommendations. A month ago, Strong Buy made up 87.18%, while Buy represented 10.26%.
The ABR of 1.14 is pretty upbeat compared with 1.94 ABR held by the e-Commerce industry and 9.99 ABR held by the S&P 500.
ETFs in Focus
ProShares Online Retail ETF ONLN – Amazon has 24% Focus
Consumer Discretionary Select Sector SPDR Fund XLY – Amazon has 23.82% Exposure
Fidelity MSCI Consumer Discretionary Index ETF FDIS – Amazon has 23.52% Exposure
Vanguard Consumer Discretionary ETF VCR – Amazon has 22.57% Exposure
VanEck Retail ETF RTH – Amazon has 21.04% Exposure
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Amazon.com, Inc. (AMZN) : Free Stock Analysis Report
VanEck Retail ETF (RTH): ETF Research Reports
Shopify Inc. (SHOP) : Free Stock Analysis Report
Consumer Discretionary Select Sector SPDR ETF (XLY): ETF Research Reports
Vanguard Consumer Discretionary ETF (VCR): ETF Research Reports
Fidelity MSCI Consumer Discretionary Index ETF (FDIS): ETF Research Reports
ProShares Online Retail ETF (ONLN): ETF Research Reports
