Amazon.com Inc. (AMZN - Free Report) announced plans to open its second fulfillment center in Stockton, in order to meet the growing demand in the online shopping space.
According to Amazon, the new facility, spanning one-million square foot, will create more than 1,000 full-time jobs. The center will primarily focus on items such as patio furniture, bikes, outdoor equipment and rugs.
Since the last few years, the company has been spending heavily on its new fulfillment centers. Fulfillment centers are giant warehouses that help online retailers store and ship products, as well as handle returns quickly. These are important for providing the level of service that customers have started expecting from Amazon.
Over the past year, the company has outperformed the industry it belongs to. Shares of Amazon have gained 96.5% compared with the industry’s growth of 37.9%.
More on the Headlines
The world’s largest online retailer has been strengthening its presence in California, having invested more than $19 billion in the state since 2011. Over the last few years, Amazon announced the opening of multiple facilities in the state, given healthy business environment and skilled manpower. Amazon’s other fulfillment facilities in Central and Northern California are located in Fresno, Newark, Patterson, Sacramento, Tracy and Vacaville.
To date, Amazon has created more than 39,000 full-time jobs in California and continues to hire manpower to meet the growing customer demand.
Amazon stated that it pays competitive wages and provides healthcare along with other full-time benefits. In addition, the company offers programs like Career Choice to help employees pursue courses related to fields that are in demand. The online giant also provides other benefits like generous maternity and parental leaves.
The world’s largest online retailer has been strengthening its presence all over the world.
In our view, Amazon must maintain its U.S. market share while expanding globally to retain its leading position. To this end, the company needs to invest more in fulfillment, as well as technology and content, especially in international markets with less penetration and higher growth rates.
Though increased expenses may hurt Amazon’s bottom line in the near term, we believe that this is necessary to maintain its dominance in this highly competitive market.
Zacks Rank & Other Stocks to Consider
Amazon currently carries a Zacks Rank #2 (Buy). Other top-ranked stocks in the same industry include Infineon Technologies AG (IFNNY - Free Report) , ON Semiconductor Corporation (ON - Free Report) and Rambus Inc. (RMBS - Free Report) , each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Long-term earnings growth for Infineon Technologies, ON Semiconductor and Rambus is currently projected to be 7.5%, 13.2% and 10%, respectively.
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