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Amazon Posts Record-Breaking Holiday Sales: Time to Buy AMZN Stock?

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Shares of Amazon (AMZN - Free Report) popped 5% in morning trading the day after Christmas after the e-commerce powerhouse said that its customers made more purchases worldwide than ever before during the holiday season. The question now is should investors consider buying Amazon stock on the dip as we move into 2019?

Holiday Shopping

Amazon posted record-breaking sales during the vital holiday shopping period, according to a company statement Wednesday. The company sold millions of more Amazon devices, which include the new Echo Dot and Fire TV Stick 4K, compared to 2017.

Overall, Amazon shipped more than one billion items for free as part of its Prime membership offerings in the U.S. alone. Jeff Bezos’ firm also saw “tens of millions” of people start their free Amazon Prime trials and begin their paid memberships.

Amazon stock jumped 5% to reach $1,411.10 a share in morning trading Wednesday. Despite this surge, AMZN stock still sat 31% below its 52-week high of $2,050.50 a share. Investors should note that other beaten-down stocks, including Facebook (FB - Free Report) and Apple (AAPL - Free Report) , also surged as the larger market tries to rebound from a rough December.

Overview

Amazon is coming off a Q3 that saw its revenue grow far slower than recent periods. Third quarter sales climbed 29% to reach $56.6 billion, which came in below Q2’s 39% surge and Q1’s 43% climb. The question for investors is can they find new reasons to be excited about Amazon?

Right off the bat, Amazon is projected to capture approximately 50% of the total U.S. e-commerce market in 2018, up from 44% last year. This should help the e-commerce giant remain strong compared to Target TGT, Walmart (WMT - Free Report) , and Costco (COST - Free Report) . Meanwhile, Amazon grabbed 35% of the cloud infrastructure services market last quarter, which helped it come in well above second-place Microsoft’s (MSFT - Free Report) roughly 15%, as well as IBM (IBM - Free Report) , Google (GOOGL - Free Report) , and Alibaba (BABA - Free Report) .

Outlook

Looking ahead, our current Zacks Consensus Estimate calls for Amazon’s Q4 revenues to jump 18.5% to reach $71.61 billion. More specifically, Amazon’s cloud computing business is expected to jump roughly 43% from $5.113 billion in the year-ago period to reach $7.298 billion, based on our NFM estimate. For reference, Amazon Web Services revenues surged 46% last quarter and 49% in Q2.

Amazon fiscal 2018 revenues are expected to surge 30.8% to touch $232.69 billion. Peeking ahead to fiscal 2019, Amazon’s top line is projected to hit $280.4 billion, which would mark a 20.5% jump above our 2018 estimate.

At the bottom end of the income statement, Amazon’s adjusted fourth quarter revenues are projected to skyrocket 154% to reach $5.48 per share. AMZN’s full-year earnings are also expected to soar 328.6%. Plus, fiscal 2019’s EPS figure is projected to come in 37% higher than our 2018 estimate. It is also worth noting that Amazon’s positive earnings estimate revision activity helps it earn a Zacks Rank #2 (Buy) at the moment.

Bottom Line

Amazon’s days of insane top-line growth might be over—for now at least. But the firm has some newer businesses that look poised to help it continue to expand.

One with some serious potential is Amazon’s digital advertising segment. The company is set to move into third-place this year behind only Google and Facebook. Amazon will continue to grow its ad business as more consumers begin their product searches across its website and app. Plus, Amazon has jumped deeper into the pharmaceutical industry with its PillPack purchase, which should help it challenge CVS CVS and Walgreens Boots WBA.

Amazon is also ready to expand its Prime Video offerings to help it stand out against Netflix (NFLX - Free Report) and soon enough Disney (DIS - Free Report) , Apple, and AT&T (T - Free Report) as we race into what could become an almost completely streaming future. And Amazon has actively grown its brick-and-mortar business, with a focus on its cashierless Amazon Go stores.

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