When scanning the list of the best stocks, one Internet giant you should never ignore, that is Amazon (AMZN). This stock both has strong fundamentals and a pretty price performance. Almost no one will question about the profitability of the company and its leadership in the online e-commerce field. Over the past ten years, this stock has grown from $16.05 to the current $226.85, representing an increase of more than 1240%.
Amazon released the fiscal 2012 first quarter financial results, showing that net sales were $13.18 billion, an increase of 34% compared to a year ago, and exceeded the consensus estimate of $12.9 billion; net profit reached $130 million, or 28 cents per share, down 35% compared to the same period last year, and outperformed the average analyst estimate of 6 cents share. Also read: AMZN stock price was promoted by the strong Q1 earnings report.
Amazon’s pretty first quarter financial performance played a positive role to convince investors into believing that the input in transforming the company into a technology company has begun to pay off.
Following the good financial report, AMZN stock price rose sharply by 15.75% in Friday’s regular trading, recording the biggest intraday rise since October 2009. Calculated by the increase in AMZN shares, the company’s market cap increased nearly $10 billion in one day.
In recent quarters, the company’s large sums of expenditures had negative impacts on the company’s profit, therefore, AMZN stock saw sluggish performance recently. However, Amazon’s gross margin increased 120 basis points in the fiscal 2012 first quarter, and reached the 24% expectation of the Macquarie analyst Ben Schachter.
According to the latest report released by the Internet traffic monitoring firm comScore, Amazon Kindle Fire tablet has accounted for a share of 54.4% in the U.S. Android Tablet PC market this February and occupied the first position. Compared to the data for 2011 December, Kindle Fire’s market share almost doubled while the product market share of the other manufacturers is shrinking. The researchers did not explain the reason for the change, but Kindle Fire’s $199 price should be the crucial reason for the consumer preference in Kindle Fire. Amazon’s Tablet PC is currently able to directly compete with Apple iPad.
Amazon CEO Jeff Bezos has been trying to convince investors to continue the long-term investments in Amazon, despite the company has suffered consecutive losses over the past several quarters. Bezos is trying to transform Amazon from a large online retailer into a technology service provider. Some investors strongly advocate that Amazon’s valuation is equivalent to 70 times the forward earnings, which overdrops Apple and Google. Investors believe this valuation is reasonable, because Amazon’s profit will rise substantially, as the company is expanding their business in the cloud platform service area with higher profitability and becoming an online marketplace linking the buyers and sellers from a hosting site.
As of the market closing Friday, AMZN stock price rose $30.86, or 15.75%, to close at $226.85. The total market capitalization reached $102.2 billion.
Also read: Friday’s top stock gainers.