Amazon.com Inc (AMZN) – Promising stock for 2019 in spite of darkening world economy

[NASDAQ: AMZN]: The World Bank has given a bearish prediction for the world economy in 2019 and 2020. According to the World Bank, the global economy is likely to record a growth of 2%, slightly lower than earlier forecasts. The key reasons for this are the trade disputes between the U.S and China, and the rising debt levels, both at corporate and government level. However, in spite of these challenges,Amazon.com, Inc (AMZN) comes off as a stock that is likely to give healthy growth to investors in this period.

For starters, the China-U.S trade war could be coming to an end. Talks have been going on quite well, and yesterday president Trump confirmed this via twitter. If this comes to a good ending, as it probably will, it will have lifted a huge dark cloud that is currently hanging over the world economy.  If the trade war between the U.S and China comes to a positive ending, it will spur growth, and companies that are already on a growth trajectory are likely to give even higher growth.

Amazon is already one such company.  At the moment, Amazon is the world’s most valuable company. This is an indicator of the company’s strengthening grip on the global retail industry. For a company that controls close to 50% of all online sales in the U.S, a strengthening global economy would mean more consumer purchases and faster growth rates. Besides, even if the world economy were to slow down as the World Bank is predicting, Amazon would still be one of the companies that would make it big in the year. That’s because, it would be cushioned by its huge sales volumes and market dominance. It is smaller online retailers that don’t have scale that would suffer most from a slowing global economy.



On the issue of corporate debt, which is another area that the World Bank has touched on,Amazon.com Inc (AMZN) is still fully insulated. Amazon has a total debt of $47.22 billion and a current ratio of 1.08. This means that Amazon’s debt levels are fully within manageable levels. Besides, the company’s free cash flows act as a cushion for the company from any adverse effects of corporate debt. This is another aspect to Amazon that makes it a good for 2019 and 2020 and beyond.

With such strong fundamentals, Amazon (AMZN) makes for a good bet. The company is up by 29.91% in the last 52-weeks, and is edging closer to its 2018 highs of $2000. For an investor looking to go long on Amazon (AMZN), the key level to watch is the 200-day moving average at $1761.50. The moment it pushes above this level, Amazon (AMZN) will have confirmed its Bullish trend for 2019. How high it could go is a function of its fundamentals, and the global economy. If these stay positive all through the year, Amazon.com Inc (AMZN) could beat investor expectations for the year. It’s will be a bright year for Amazon (AMZN).

SHARE
Previous articleFacebook (FB) – As FAANGs recover, Facebook (FB) is the stock to watch
Next articleChesapeake Energy Corporation (CHK) – Prospects looking good as OPEC cuts supply