S&P 500   4,567.00
DOW   34,483.72
QQQ   393.82
S&P 500   4,567.00
DOW   34,483.72
QQQ   393.82
S&P 500   4,567.00
DOW   34,483.72
QQQ   393.82
S&P 500   4,567.00
DOW   34,483.72
QQQ   393.82

3 Reasons Why Amazon (NASDAQ:AMZN) Stock Will Have a Strong 2021

Wednesday, December 30, 2020 | Sean Sechler
3 Reasons Why Amazon (NASDAQ:AMZN) Stock Will Have a Strong 2021

As investors start to look ahead at the companies that could be in for a big 2021, it’s easy to get caught up in trying to find the next big thing. While there’s certainly something to be said about investing in up-and-coming businesses that could turn into massive winners, it’s important to avoid overlooking the tried and true companies that have been rewarding investors with huge returns for years. For example, Amazon (NASDAQ:AMZN) is a company that consistently delivers impressive earnings results, is a major disruptor, and is in a strong position to grow in 2021.

Most investors recognize that Amazon is the king of e-commerce and a company that has been a big beneficiary of the online shopping boom that resulted from the pandemic. While this has been a strong catalyst for growth this year, the stock has been quiet lately and hasn’t done much since last summer. That should change in 2021 for a few different reasons. Keep reading below to learn more about why Amazon is one of the best stocks to consider buying at this time.

Amazon Will Continue to Benefit from E-Commerce and Cloud Services Tailwinds

One of the things investors can count on next year is that Amazon will continue to capitalize on the growth opportunities that have been created by the pandemic. A lot of this has to do with Amazon’s operational efficiency, strong customer service, and low prices that competitors simply cannot match. The company has grown its total number of Prime members by roughly 12.5% in 2020 which should lead to strong e-commerce sales figures next year. Also, with many physical retailers hindered by the pandemic, Amazon has become a vital distribution channel for major brands, a trend that will continue in 2021. Finally, the company should see strong growth in international markets as their economies rebound.

You also have to like the potential for Amazon Web Services next year, as it’s the global leader in cloud-based infrastructure-as-a-service (IaaS) platforms. The trend of companies moving their operations into the cloud was occurring before the pandemic, and that trend has only accelerated this year. With telecommuting on the rise more and more companies in need of rapid processing speeds, Amazon’s industry-leading cloud computing offerings could deliver strong numbers for investors. Amazon Web Services offers cloud-based products like storage, databases, computing, analytics, networking, mobile, and more, which will all be in high-demand next year.

Amazon Pharmacy Provides Another Unique Opportunity

Sometimes, when a company tries to do too many different things, it’s a detriment to their overall success. That’s not the case with Amazon, a business that has proven it can manage multiple unrelated business segments with skill and efficiency. That’s why it’s not at all surprising to see Amazon making strategic moves that will bring the company significant revenue from the healthcare market. Amazon announced its Amazon Pharmacy offerings back in November which provides Prime members with a two-day prescription delivery plan.

The U.S. Pharmacy market is estimated at roughly $75 billion, which means that this new service allows Amazon to capture significant market share from competitors. Amazon Pharmacy can provide cost savings on medicines that people need regularly and have medications delivered faster than competitors thanks to the company’s massive logistics network. There’s also the opportunity for cross-selling thanks to new customer data that will be generated from Amazon Pharmacy customers. The bottom line here is that Amazon Pharmacy could be a huge success for the company in 2021 and be a big factor in helping the stock reach new highs.

Amazon’s Recent Investments in Fulfillment Centers Will Pay Off

The sheer scale of a company like Amazon and its colossal logistics network is jaw-dropping. The fact that the company has been heavily investing in its fulfillment centers in 2020 is another reason why the stock could be in for a huge 2021. Amazon anticipates that it will end 2020 with 410 million square feet of fulfillment center operations, which represents an 80% year-over-year increase.

This is important because it will allow Amazon to eventually provide one-day shipping to the majority of its Prime members across the United States. Once that occurs, there will be no stopping Amazon from continuing its domination of the retail shopping market. The expanded fulfillment centers will also help Amazon to grow its grocery delivery services. Total U.S. grocery store sales in 2019 came in at just under $700 billion, representing a huge opportunity for the company. Investors should understand that Amazon is well on its way towards generating even more profits for shareholders thanks to its unparalleled network of fulfillment centers.

Amazon.com is a part of the Entrepreneur Index, which tracks some of the largest publicly traded companies founded and run by entrepreneurs.

Should you invest $1,000 in Amazon.com right now?

Before you consider Amazon.com, you'll want to hear this.

MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Amazon.com wasn't on the list.

While Amazon.com currently has a "Buy" rating among analysts, top-rated analysts believe these five stocks are better buys.

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Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
Amazon.com (AMZN)2.3$3,507.07-1.5%N/A68.60Buy$4,179.47
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