We recently compiled a list of the 20 High Growth Mega Cap Stocks You Can Buy And Hold For Next 5 Years. In this article, we are going to take a look at where Amazon.com, Inc. (NASDAQ:AMZN) stands against the other high growth mega cap stocks.
Exactly 5 years ago, the world struggled to deal with a black swan event: the COVID-19 pandemic. There was so much uncertainty that people didn’t even know if they’d be alive in the next few weeks, let alone figure out where the market was heading. Anyone who invested in the S&P 5 years ago would have gained 83%. If you had bought at the exact bottom, you’d have gained twice that amount.
What the above proves is that the present isn’t necessarily an indicator of what the future holds. All companies that had their workflows disrupted have recovered, some more than others. Some companies have strengthened their supply chains. Others have improved their work-from-home capabilities. Industries like airlines and restaurants have modified their business models to cater to the new dynamics.
These companies have been able to deal with the changing dynamics because of their financial strength and innovation. A company’s past performance and its finances give a good idea of whether it will be able to survive bad times. That’s why when we look at the best mega-cap stocks to hold for the next 5 years, we look at how well they have grown in the last 5 years.
To come up with our list of top 20 mega-cap stocks to hold for the next 5 years, we considered stocks with a market cap of at least $200 billion and a 5-year sales growth rate of at least 10%.
A customer entering an internet retail store, illustrating the convenience of online shopping.
Amazon.com, Inc. (NASDAQ:AMZN)
Amazon.com, Inc. (NASDAQ:AMZN) provides subscription & advertising services as well as in-store sale of consumer products through physical and digital stores. It operates in Amazon Web Services (AWS), International, and North America segments. Amazon.com, Inc. (NASDAQ:AMZN) also develops media content and manufactures and sells electronic devices. The company has grown its revenue by 18.31% over the last 5 years.
Few would doubt Jeff Bezos’ ability to bring in growth. Anyone who has backed the billionaire’s firm in the past has reaped great rewards and with the recent dip, investors have another chance to accumulate the company’s shares. The company’s retail business is making headlines as it just passed the largest retailer Walmart in terms of quarterly sales. The Q4 revenue for Amazon stood at $187.79 billion while Walmart was in second place with $180.55 billion. This was the first time a company beat Walmart in quarterly revenue since 2012!
In the fourth quarter, Amazon.com, Inc. (NASDAQ:AMZN) expanded its same-day delivery locations by 60%, now spanning across more than 140 metro areas. For the second year in a row, the company was able to lower per-unit costs thanks to automation and inventory optimization. These cost reductions help the company maintain long-term profitability though there are challenges in scaling this automation(an aspect that could significantly improve with the fast-paced developments in AI and robotics).
Overall AMZN ranks 13th on our list of the high growth mega cap stocks you can buy and hold for the next 5 years. While we acknowledge the potential of AMZN as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as AMZN but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.
