With contrasting news emerging about trade relations between the US and China, and the Covid-19 pandemic, you need stocks that give you long term stability.
Is Long-term Investment in the Ecommerce and Video Streaming Markets Worthwhile?
One of the challenges in the stock market is staying calm despite the uncertainty that rocks it. With zero commission trading offered by online broker-dealers, you sure can get attracted to stock trading. But avoiding knee-jerk reactions is something you learn from experience.
Everyone’s Eyes on the US-China Trade Relations
How strong is the US-China trade deal now? Well, Trump believes it is “intact”. That belief was expected to do wonders for the stock market. What Trump said seemed to contradict Peter Navarro’s response to a Fox News interview that the deal was off. Navarro responded, saying that the statement was quite “out of context” and it was particularly in reference to mistrust with China.
While the vagaries of the trade deal with China could keep sending the markets up and down, it is important to have a long-term perspective towards trading. You need stocks that you can hold on to for a long period of time. With that perspective, analyst Parkev Tatevosian recommends the eCommerce industry, with one stock particularly standing out.
Why Amazon Could Be a Rock in Turbulent Seas
Looking at e-commerce giant Amazon, its past is its greatest record book. From 2014 to 2019, the company grew its revenue from $89 billion all the way to $280 billion. It has benefited from brick-and-mortar store customers gravitating towards online shopping, which has only accelerated during the coronavirus pandemic when people are asked to remain indoors as much as possible. And according to Motley Fool contributor Brian Stoffel, Amazon could continue its amazing growth pace.
While the American economy has reopened following the pandemic-induced lockdown, there are still Covid-19 cases being reported. The pandemic hasn’t died down completely, and people are still advised to maintain social distancing. In such contexts, shopping from home continues to be the best option.
A Loyal Customer Base for Amazon
Amazon already has a loyal customer base. Its global Prime membership is in the region of 150 million. And while the pandemic has brought in new customers for Amazon, they are likely to stick around even if the pandemic conditions subside. They have tasted the convenience and reliability of online shopping with Amazon and wouldn’t want to give it up. They could either continue shopping with Amazon as non-members or be tempted to take up Prime membership. Tatevosian states that 65% of Amazon shoppers already were Prime members in 2019. As a result, Amazon’s growth isn’t showing signs of slowing down anytime soon.
The Video Streaming In-home Entertainment Market
Amazon’s Prime membership not only offers free delivery for many of its products, but also the Prime Video streaming service. That has put the online shopping giant firmly in the competitive video streaming market. In-home entertainment is another industry that has taken off with pandemic-induced shutdown. Even before the pandemic, home entertainment was getting popular with many other providers out there, particularly Netflix ($NFLX) and Disney ($DIS). Now, when Prime membership comes with shopping benefits plus streaming service, it becomes hard to resist.
Rising Popularity in the Cloud Computing Industry
And let’s not forget the company’s cloud computing division, Amazon Web Services (AWS). AWS had a 33% growth in the latest quarter. Overall revenue had a 29% growth. AWS, therefore, grew revenue even faster than the whole company. Despite constituting only 13.5% of Amazon’s total sales, AWS made up 77% of its operating income.
With so much going for it, Tatevosian reckons there is some long-term stability in the stock despite the uncertainty that political events and the pandemic could bring about.