1. Amazon.com, Inc. (NASDAQ:AMZN)
Number of Hedge Fund Holders: 339
Market Cap as of March 27: $2.134 trillion
Enterprise Value as of March 27: $2.16 trillion
Amazon.com, Inc. (NASDAQ:AMZN) tops our list of the best halal stocks. It is a major American multinational technology company that engages in a variety of industries, including e-commerce, cloud computing through Amazon Web Services (AWS), online advertising, digital streaming, and artificial intelligence. Using technologies like DynamoDB, Redshift, and EMR, the company has been a pioneer in leveraging data analytics and recommendations for e-commerce.
Youssef Squali, an analyst at Truist Securities, reaffirmed his Buy recommendation and $265 price objective for Amazon.com, Inc. (NASDAQ:AMZN) on February 24. North American revenue is slightly exceeding consensus estimates for the quarter thus far, according to Squali’s analysis, which is based on data through February 17. Squali claims that this helps the company maintain its standing as a significant force in the broadband retail industry while giving it an edge over its smaller rivals.
The financial performance of Amazon.com, Inc. (NASDAQ:AMZN) in the fourth quarter of 2024 demonstrated significant growth, surpassing forecasts with revenues of $187.8 billion and an EPS of $1.86. Additionally, operating income climbed from $13.2 billion to $21.2 billion in Q4 2024, while net income more than doubled to $20 billion, primarily due to AWS.
Polen Focus Growth Strategy stated the following regarding Amazon.com, Inc. (NASDAQ:AMZN) in its Q4 2024 investor letter:
“Consistent with our thesis, Amazon.com, Inc. (NASDAQ:AMZN) has continued to see operating margins expand, hitting 11% in the most recent quarter after bottoming around 2% at the end of 2022. This march higher in margins stems from a mix shift towards faster-growing, higher-margin segments like Amazon Web Services (AWS) and Advertising, combined with better fulfillment efficiency in the e-commerce business following significant investments in recent years. Further, speaking to its runway ahead, CEO Andy Jassy noted the company’s AI business is a “multi-billion-dollar business growing triple digits,” 3x faster than AWS did itself at the same stage in its evolution. While we trimmed our position during the quarter, Amazon remains our largest position, as we expect approximately 20% earnings growth over the next five years driven by a mix of solid organic revenue growth and continued margin expansion.
We trimmed our positions in UnitedHealth Group, Amazon, ServiceNow, and Gartner during the quarter. Amazon continues to deliver excellent results with all businesses growing robustly and profit margins expanding. When we significantly increased Amazon’s weighting in the portfolio about two years ago, its operating margins were at 2%, and we anticipated they would expand to the mid-teens over the next few years. Today, they stand at 11%, and we expect them to expand closer to the high-teen level in the next few years. The earnings growth potential from here is roughly 20% per annum based on our expectation for revenue and profit margin expansion. While this still represents excellent potential and Amazon remains our largest position, we no longer feel it merits a maximum position size.”
Overall, Amazon.com, Inc. (NASDAQ:AMZN) ranks first among the 10 debt-free halal stocks to invest in right now. While we acknowledge the potential of debt-free stocks, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than AMZN but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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