By: Dividend Sensei
Amazon plunged 23% after earnings, as cash flow estimates fell 27% due to higher costs and a weakening consumer.
Amazon’s long-term growth outlook fell from 32% to 19.2% CAGR, still better hyper-growth than any FAANG stock.
AMZN’s balance sheet is an AA-rated fortress with $60 billion in cash, $70 billion in liquidity, and a 0.55% fundamental risk over 30 years, and 68th percentile risk management.
AMZN growing at 8% to 13% has historically been valued at 28X to 31X cash flow and its long-term market-determined fair value range is 25 to 27.
Today Amazon trades at a 45% historical discount, 13.6X cash flow, and a 13.9X cash-adjusted PE. It could deliver 160% returns by the end of 2024, and 330% returns over 5 years, a 33% annual Buffett-style return.
I bought Amazon 5 times after its earnings crash and it remains one of the best Ultra Value Ultra SWANs on Wall Street today, as close to a perfect hyper-growth blue-chip opportunity as exists.