Is Amazon A Buy At Record Highs?

Amazon stock ended yesterday 4.35% higher at 2,878.70, making fresh record highs as sales jumping as more and more consumers shift to online shopping. The company is making extra investments to fulfil the rise in online orders while keeping its staff safe. The company said that it would be spending $4 billion on coronavirus related expenses. 

Amazon is improving its online services to satisfy the excess demand that came with the coronavirus lockdown and making preparations for the second wave of coronavirus. Online shopping has accelerated during the COVID-19 lockdown benefiting Amazon, Walmart, Etsy, and eBay, and also the online entertainment providers. Amazon also announced a significant expansion in its fleet as the online orders volumes explode. The leases of air cargo modified Boeing 767-300 will increase the company’s number of available aircraft from 70 to 82. Amazon is planning to open three new hubs, one in Florida, another in Kentucky, and a third in California. 

The CEO of the FAANG companies (Facebook, Amazon, Apple, and Google, had agreed to testify before the Congress in an antitrust investigation, that started last year on alleged anti-competitive practices at the technology firms and requested the companies to turn over all relevant documents related to acquisitions and mergers.

Amazon Valuation

On the fundamental side, Amazon capitalization has reached 1.34 trillion and trades at 128.66 times earnings, making it the most expensive choice between its competitors. Alibaba is trading with a P/E ratio at 29.04 while Costco trades with a P/E ratio at 36.05. Walmart is trading at 25.11 times earnings, while the Target Corp price to earnings ratio stands at 21.98. The PEG ratio stands at 2.90, while the Price/Sales stands at 4.59. 

Amazon will report its second-quarter earnings on Thursday, July, 23.

Amazon Daily Analysis

Amazon finished yesterday 4.35% higher at 2,878, as the rising trend line that started since the March lows drive the stock to consecutive record highs. Amazon stock has entered for one more time the overbought territory, and a pullback back to 2,650 can’t be ruled out. 

On the upside, the immediate resistance stands at 2,895 the record high. In case the Amazon stock breaks higher, then the next resistance would be met at 2,900 psychological mark.  

On the contrary, first support for Amazon share will be met at 2,754 the daily lows. A move below 2,754 might test the next support zone at 2,688 the low from yesterday’s trading session. More bids might emerge at 2,634 the low from June 29.  

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Amazon Price Daily Chart

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