- Tech and the impressive growth within the sector play an important role in my well-diversified portfolio.
- Amazon is the world's most dominant cloud player and is set to become the largest e-commerce retailer on the planet.
- The company enjoys a near-perfect credit rating from S&P.
- Shares of AMZN appear to be trading at a 49% discount to fair value, which could be an appealing margin of safety.
- The world-beating business could 8x the S&P through 2025 and conservatively 6x the index over the next 10 years.
In this article, the author, Kody's Dividends, discusses why Amazon.com
Inc. (AMZN) is the second-largest holding in their well-diversified portfolio. The focus on blue-chip tech stocks, especially within the top 10 holdings, reflects the author's confidence in the tech sector's impressive growth. Amazon, being the world's dominant cloud player and a prospective leader in global e-commerce, has earned a significant position in the author's portfolio.
- Financial Strength and Credit Rating:Amazon boasts a robust financial position with a 46% debt-to-capital ratio, slightly above the industry's safe threshold of 40%. S&P assigns Amazon a AA credit rating, indicating a stable outlook and a low 30-year risk of bankruptcy (0.51%).
- Valuation and Growth Potential:Shares of Amazon are perceived to be trading at a 49% discount to fair value, based on historical valuation metrics. The author sees this as an appealing margin of safety for investors. Even if Amazon reverts to fair value and grows at half the analyst consensus, the stock could potentially generate substantial returns, outperforming the S&P 500 significantly over the next 10 years.
- Business Segments and Market Position:
