Whether you’re an Amazon customer or not, you’ve probably heard about Prime Days.
The two-day event – July 11 and 12 this year – is one of the biggest shopping events of the year. Bank of American analysts say Amazon could sell $12 billion worth of stuff in those two days.
Pretty impressive for a company that started out as a bookstore in 1995, is it?
Today, Amazon (AMZN) has more than 300 million active users and brought in $514 billion in revenue last year.
Oh, and its stock is valued at $1.3 trillion, giving it admission into an ultra-exclusive club that includes just four other stocks – Apple (AAPL), Microsoft (MSFT), Alphabet (GOOG), and Nvidia (NVDA).
Just Google “Amazon Prime Days 2023,” and you’ll find an endless number of articles, blogs, videos, and everything else telling you where to find the best deals. I did it and got 1,930,000,000 results.
That would keep you busy for a while.
You and your friends may be mapping out your wish list in anticipation of great deals, but what about the stock itself?
After all, Amazon stock has been one of the leaders this year, surging 50% here in 2023.
In fact, Fortune reported at the end of May that those trillion-dollar giants were responsible for almost all of the S&P 500’s gains this year as it entered a new bull market – 96%, in fact.
Should you add AMZN to your list of Prime Day deals? Or wait for a better bargain?
Let’s find out…
Thorns Among the Roses
The first important data point is Amazon’s Quantum Score, which is 63.8.
As regular readers know, this is my Quantum Edge system’s overall stock ranking that rolls up all of my data and algorithms into one easy-to-use number.
That score in the low 60s is kind of meh. It’s not bad, but it’s not great either.
And it’s unusual that a stock blazing 50% higher in just six months would rate that low – so, let’s look under the hood to see what’s really going on.
The Quantum Score is a product of two other scores: the Fundamental Score and Technical Score. Each are products of dozens of data points and algorithms that analyze those data points.
The Technical Score tells us how a stock is trading, and that’s where Amazon’s strength lies. AMZN rates 73.5 on my proprietary analysis of the technicals, which is quite strong.
Investors have clearly jumped on the momentum, including Big Money. My system has picked up 11 Big Money buy signals here in 2023 – most of them in May – which boosted the price and the technical strength.
The Fundamental Score – an even 50.0 – is what’s holding back the overall rating.
I normally shy away from fundamental ratings that low. Amazon is proof that stocks with so-so fundamentals can still move higher. But according to my research, the probability it stays higher goes way down.
And probability is what we should be after. We want to own the stocks with the highest probability of making us money, and those are the stocks with both strong fundamentals and technicals… that also have Big Money flowing in.
Sales and earnings growth are okay, but not great. Amazon has historically made little or no money, and the company does have a negative profit margin (-0.5%). The stock is also trading at 81.2 times those expected future earnings, which is high and not often sustainable.
Debt is also a concern, especially in a time of higher interest rates. Amazon is leveraged at twice its equity, which is too high in my view.
The Answer Is…
Quantitative analysis of Amazon reveals that it falls short of being a buy right now.
Its Quantum Score of 63.8 is under my target zone of 70 to 85. And after the stock’s big run, those fundamental concerns may become more prominent at the higher valuation.
But look, Amazon is a legendary company. A lot of investors think of it as an e-commerce company, which is undoubtedly is, but its Amazon Web Services (AWS) cloud division will drive most of the future growth. Some investors may be comfortable buying for long into the future.
Me? I would rather wait for stronger ratings and to see it at the top of my research.
My system also generates a weekly Top 20 list of the highest-rated and strongest stocks in the market. Hedge funds and institutions pay a lot of money for this list.
AMZN has not appeared on that list since July 2020, when the stock was trading around $150.01. It went on to nearly $190 a year later… and is still 32% below that price after technology’s rough stretch in late 2021 and most of 2022.
Looking back, Amazon first appeared on my Top 20 list in November 2002, and it is up nearly 11,500% since then.
Give this company’s power and innovation, it will probably return to the top of my research into the future, and that would be the time I would buy.
In the meantime, I see stronger opportunities out there, like the homebuilder we recently added to our Quantum Edge Trader portfolio that has a superb Quantum Score of 82.8, strong fundamentals, Big Money inflows, and has appeared on my elite Top 20 list two times in just the last month.
If you’d like the details, and to start getting my buy and sell alerts, click here to learn more.
Jason Bodner’s Power Trends