When it comes to the high-stakes world of ETF investing, Cathie Wood stands out as a maverick in a sea of conventional thinkers. Her meteoric rise to fame began when the Ark Innovation ETF (ARKK) boasted an eye-popping 73% return in the tumultuous year of 2020.
Yet, beneath the veneer of short-term triumph lay a more somber truth. Wood’s flagship ETF, ARKK, has failed to replicate its former glory in the long run. Over the past year, it delivered a modest 25.7% return, with a lackluster 12.2% over the preceding five years. In stark contrast, the S&P 500 outshone with returns of 35% and 95.4% over the same periods, respectively.
Cathie Wood’s Recent Moves: Amazon & Meta Stocks
Against this backdrop of mixed fortunes, Cathie Wood has been making waves in the investment arena once again. On an eventful day, October 8, 2024, Ark Innovation ETF plunged into the market, acquiring a chunk of Amazon shares worth a staggering $14 million. While Amazon’s stock witnessed an 18% surge since August 5, a temporary setback saw it dip by 9.8% from September 24 to October 8.
Morningstar’s Dan Romanoff sounds bullish about Amazon, citing the company’s stronghold in e-commerce and cloud services, thus bestowing Amazon with the coveted ‘wide moat’ tag. With a fair value pegged at $195, Romanoff’s optimism seems well-founded in Amazon’s solid fundamentals.
Not to be outdone, the Ark Next Generation Internet ETF jumped on the bandwagon, scooping up a substantial 2,365 shares of Meta Platforms. Despite concerns of overvaluation, analyst Malik Ahmed Khan points to Meta’s unassailable dominance in the social media landscape across platforms like Facebook, Instagram, WhatsApp, and Messenger.
Should You Consider Amazon Stock & ETFs?
Amazon.com, sporting a Zacks Rank #3 (Hold), boasts an impressive VGM Score of “A” and sits at the vanguard of the top 18% within the Internet – Commerce industry. The unassailable e-commerce behemoth continues to gather steam with its Prime services and a robust content portfolio, making it an enticing proposition for investors.
Regarded as a wide-moat stock, Amazon’s unwavering dominance in the e-commerce realm, coupled with network effects and a cost advantage, signals a fortified position amidst a crowded retail landscape. As Amazon sharpens its focus on Amazon Web Services (AWS), its cloud supremacy gains further traction, with a market share surge alongside key competitors Google and Microsoft.
The strategic pivot towards generative AI, facilitated by the maturation of in-house processors via Amazon’s Annapurna Labs, challenges the status quo in chip technology and underscores Amazon’s commitment to innovation and cost efficiency.
Amazon Stock’s Valuation & Potential
Amazon’s stock metrics paint a compelling picture. While the price/earnings ratio of 44.29X bests the industry’s 57.54X, Amazon’s Price/Book ratio clocks in high at 8.30X compared to the industry average of 2.02X. Additionally, Amazon’s price/cash flow ratio of 24.74X overshadows the industry’s 14.28X. Amazon’s robust growth rates over the current and next year underline its potential for sustained expansion.
AMZN Stock Price Target
Market analysts forecast a promising outlook for Amazon, with a collective average price target of $225.98 – heralding a bullish uptick of 20.92% from the recent closing price. The range of projections, spanning from $183.00 to $265.00, underscores the optimistic sentiment surrounding Amazon’s trajectory.
Amazon-Heavy ETFs in Focus
Given the nuanced landscape of cloud and AI competition, tracking Amazon’s journey through ETFs offers a diversified path to capitalize on its potential. ETFs like Consumer Discretionary Select Sector SPDR Fund (XLY), ProShares Online Retail ETF (ONLN), and Fidelity MSCI Consumer Discretionary Index ETF (FDIS), laden with Amazon stocks, present an attractive proposition to mitigate company-specific risks and ride the coattails of Amazon’s resurgent growth story.