Should You Buy Amazon Stock (AMZN) in October?
Key Points
It’s impossible to ignore how cheap Amazon shares have gotten on a price-to-earnings basis.
This dominant company’s growth is getting a boost by accelerating revenue trends in the cloud segment.
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Investors who have been fortunate enough to have owned Amazon (NASDAQ: AMZN) over the years have certainly boosted their portfolios' performance. The megacap enterprise, valued at $2.7 trillion, has a leadership position in numerous industries. Its success is a direct result of founder Jeff Bezos' philosophy of obsessing over the customer.
This business is probably still at the top of every investor's watch list. Should you buy Amazon stock in October?
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Shares currently trade 12% off their peak (as of Sept. 30). This presents investors with what appears to be a very compelling entry point. The valuation is hard to overlook.
Amazon stock can be bought today at a price-to-earnings ratio of 20.1. History says this is extremely attractive. The lowest multiple the shares hit was 18.2, reached in late July. The stock isn't too far above that level.
Nobody can refute that Amazon is one of the world's dominant businesses. Despite consensus analyst estimates of $828 billion in net sales this year, the company still has many growth levers to draw on. Its online marketplace, Amazon's bread and butter, benefits from the ongoing e-commerce secular trend.
Digital advertising revenue surged 26% year over year in the second quarter (ended June 30). And the most exciting segment is Amazon Web Services, which is registering accelerating top-line growth with impressive profitability as it captures robust demand for artificial intelligence.
Buying Amazon stock in October is a wise decision.
Should you buy stock in Amazon right now?
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Neil Patel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon. The Motley Fool has a disclosure policy.
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