Joel Greenblatt’s Top 5 Stock Picks

2. Amazon.com (NASDAQ: AMZN)

Amazon.com (NASDAQ: AMZN) is the second-largest stock holding of Joel Greenblatt, as of the end of the fourth quarter. The firm held 17,381 shares of Amazon, down 8% from the previous quarter. Amazon stock price is also trading in the red this year despite strong growth in the pandemic year.

Mairs & Power, which returned 13.88% for the fourth quarter of 2020, highlighted a few stocks including Amazon in the Q4 investor letter. Here is what Mairs & Power said:

“We did acquire AMZN in the fourth quarter. But not owning it till then cost the Fund in performance relative to the S&P 500 TR Index. We had held off taking a position in Amazon largely due to concerns about the company’s slim margins. But in 2020, we saw its core margins nearly double as more consumers shopped online, which in turn led to greater utilization and route density within Amazon’s delivery network. In addition, Amazon’s advertising business, which represents a small portion of its overall sales, has been growing quickly. Advertising could become a third leg of growth for the company along with e-commerce and Amazon Web Services. In short, Amazon checks all of our boxes — it has a strong management team, great growth prospects, and a strong competitive advantage. And last year, we initiated our position at an intriguing valuation.”