Warren Buffett holds 0.47% of Berkshire’s assets in this stock: Is it the right one for your portfolio now? | news

In the short term, shareholders in Amazon (WKN: 906866) a bit to laugh at. The price has dropped by 25.1% over the last three months to currently $ 2,302.93 (as of May 30, 2022). But in the long run, this stock is a real pleasure. Amazon has been giving its shareholders an increase of as much as 923.4% in value since May 28, 2012!

Amazon is sticking to its growth path

Also in Germany: A few days ago, the online retailer put a new logistics center into operation in Hof, Oberfranken. Already the first year
1,000 jobs are to be created, in the future even up to 1,800. The group did not provide precise information on the size of the investments. However, it is said to be in the three-digit million range.

Germany is a significant market for Amazon

Therefore, the group is massively expanding its logistics network in Germany. By the end of the year, Amazon says it wants to operate 20 major logistics centers nationwide. That should be possible, I think. With Hof, there are already 18. Amazon also has at least 30 additional logistics locations in Germany, including sorting and distribution centers.

It is too early to write off this stock

Amazon was disappointing with its latest business figures. However, the stock is again at a relatively attractive level. In the diagram below you can see: If we look 12 months ahead, P / S is 2.01.


Amazon recently had to absorb high costs, especially through acquisitions. The purchase of the $ 8.5 billion film studio MGM has just been digested. It is the second largest acquisition in the company’s history after the American supermarket chain Whole Foods Market for DKK 13.7 billion. The sensitive heads in the stock market do not like such bites at the moment.

Participation in Rivian hits the office particularly hard. Amazon owns 18% of all shares in the electric car manufacturer. Since the company’s shares have recently fallen sharply in value, Amazon has had a pre-tax valuation loss of $ 7.6 billion. After the holding period expired – half a year after Rivian was listed on the stock exchange – the shares are still under enormous pressure.

Large investments are part of Amazon’s DNA

I’m a little worried at this point. From the second half of 2022, operations should improve again. In particular, the high-growth segments such as the online advertising business and the AWS cloud area will provide the necessary boost. Growth in the double-digit percentage will also be part of everyday life here in the medium term.

Share split ahead!

Next Monday, June 6, Amazon shares will lose one-twentieth of their value in one fell swoop. The company is planning a share split by this date. This makes each share certificate visually cheaper. This is already the fourth split in the company’s history. In the past, Amazon stocks have always performed quite well.

What does all this mean for you?

After all these pieces of information, the question arises: How much are Amazon stocks worth today? Caution: The historical relationship between price and earnings is not very meaningful due to Amazon’s traditionally high investment. The good news: Many other important indicators, such as the relationship between price and book value, relationship between price and cash flow, company value relative to Ebitda, look really good again today. The reason for this is also the market’s disappointment. We Fjolser currently see something similar with several shares.

Amazon stocks have room for improvement

I see lots of delicious ingredients here for a real gourmet return. Do you think I’m too euphoric? After the share split, the price may reach 20% in the medium term, I think. The potential for free cash flow is large enough. I currently see the fair value of the stock at around $ 2,900. Let’s see if my thesis works.

Article Warren Buffett puts 0.47% of Berkshire’s net worth into this stock: Is it the right one for your portfolio now? first appeared on The Motley Fool Germany.

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Henning Lindhoff does not own any of the mentioned shares. John Mackey, CEO of Amazon’s subsidiary Whole Foods Market, is a member of The Motley Fools’ board of directors. The Motley Fool owns shares in and recommends Amazon.

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