Last week, I talked about a couple of companies I think everyone should buy today and let run for at least a year.
And with my paid subscribers, we talk about stocks to trade for just a couple of hours or days.
I’d like to keep that conversation going, so I will, but today I’m going to raise the stakes. A lot.
I’m going to name one company everyone should buy today and never, ever sell. I’m talking “leave it to your heirs in your will” here.
The thing is, a lot of regular investors I’ve spoken with think this stock is out of reach to all but the elite.
I’m here to tell you that’s not the case. Anyone and everyone can own this company now, and they should buy in as quickly as possible…
The Old Arguments Against This Stock Don’t Apply
I’ve been recommending Amazon.com Inc. (NASDAQ: AMZN) for more than 10 years at this point. I loved the stock when it was $110… and I still love it at $3,500.
But heaven knows, it hasn’t always been smooth sailing being in Amazon’s corner. There aren’t many other stocks that provoke such strong opinions. If I didn’t know better, I’d say people were downright passionate about AMZN – one way or another.
From day one, I’ve heard arguments against the stock. I’ll run down two of the most common, plus a third in a moment.
“It’s too expensive – it’s going to tank any day now.”
“Amazon’s this close to being broken up, and when it does, I’ll lose a ton of money.”
My response to these arguments is: “Nonsense.”
Amazon always seems too expensive – but it keeps going up. If it looks pricey today at $3,500, $3,500 will look downright cheap when it’s trading at $8,000.
And while I certainly hope regulators won’t break Amazon up, at the end of the day, it doesn’t matter if it breaks up; the sum of Amazon’s parts is worth more – a lot more – than the whole.
That really speaks to the sheer brilliance of the company. Amazon isn’t one business – it’s a bunch of different businesses interwoven. If it were a tapestry, it’d be beautiful, but it’s not a tapestry: It’s one of the best stocks you can own.
For the share price, you get an e-commerce business, a distribution outfit, a manufacturing operation. It’s an artificial intelligence lab, a Big Data powerhouse, a Cloud services provider, a supply-chain and logistics business. I’d even say it’s a fantastic advertising firm; it doesn’t get enough credit for that. It’s at least nine companies in one.
Amazon is a giant that still continues to grow.
Any one of those businesses on its own is genius in the way Amazon runs them. They’re integrated seamlessly – which makes AMZN the greatest online “retailing and wholesaling” company in America (notice I said “America,” not the world – that’s a different story). That’s critically important. Of all the classic “FAANG” stocks, only Amazon gets most of its revenue from the U.S. market – a whopping 68%.
That’s great for two reasons:
Number one, the U.S. market is the world’s biggest and safest – and it’s always going to be the “cleanest dirty shirt in the laundry” when the stuff hits the fan in the global economy…
And number two, it means there’s still the remainder of that global economy to conquer. In plain English, that’s an awful lot of upside, even from $3,500.
Speaking of expansion, Amazon is currently spending about 48% of its huge cash flow (about $68 billion a year) on “capital spending” – which means there’s a ton of growth ahead for this company. Net income in 2019 was $10.6 billion – a total that nearly doubled to $21 billion in 2020. Analysts expect $25 billion for 2021 and $35 billion for 2022. That’s growth of profits on top of growth of revenue and market share and cash flow.
Really, Amazon can keep on going if it’s not broken up – which brings me to the second argument.
If, by chance, Amazon gets the Ma Bell treatment… so what? There’s every chance the company would establish tracking stocks for each of those beautiful business units. I’d own each and every one of them – and you should, too. In fact, I don’t know if I’d own much else.
Buy as Much AMZN as You Can
Then there’s that third argument I mentioned – it’s really kind of a different “flavor” of the first: “It’s too expensive – I can’t afford to sink that much capital into one stock.”
For a long time, it was tough to argue with that one. For years, you’d likely be compelled to buy “round lots” of shares, 100 or more. You could buy less – maybe – but you’d have to fork over an “odd lot” fee, not to mention a tidy commission charge.
Not everyone has $350,000 to spend on 100 shares of Amazon; that’s more than a house costs in a lot of the country. For that matter, not everyone has $3,500 to sink into one stock.
These days, though, investors are on easy street in that regard, thanks to the “Fractional Shares” revolution.
I’m constantly surprised by the number of investors who haven’t heard the good news about this change. Fractional shares are what they sound like, fractions of shares, and it’s put powerful but pricey stocks into more portfolios than ever before.
It’s the democratization of the markets, baby! Wealth to the masses. Dig it.
These days, cost-conscious investors can set aside $50, $100, $500, or $1,000 and own a fraction of a share. Whether you own 100 shares, or 1 share, or 0.33% of 1 share, it appreciates the same. Not every brokerage allows the purchase of fractional shares, but many of the “zero-commission” discount brokerages do let their customers do that.
That takes care of our three “con” arguments. There’s no reason anymore to stay on the sidelines, so get in it to win it.
Speaking of “low costs,” I recently finished a report on something I’m calling “pre-IPO rights.” These allow you to potentially own a piece of some of America’s most dynamic, exciting, and promising startups, often for under $1. In the event the company goes public, these rights can absolutely zoom in value; I’m talking peak gains of 2,088%, 6,566%, 8,280%, 9,075%, even 27,550% in exceptional cases. It gets better – on Monday, Sept. 13, the day after tomorrow, I’m unveiling a new opportunity right at the opening bell. Click here, and I’ll fill you in…
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About the Author
Browse Shah’s articles | View Shah’s research services
Shah Gilani boasts a financial pedigree unlike any other. He ran his first hedge fund in 1982 from his seat on the floor of the Chicago Board of Options Exchange. When options on the Standard & Poor’s 100 began trading on March 11, 1983, Shah worked in “the pit” as a market maker.
The work he did laid the foundation for what would later become the VIX – to this day one of the most widely used indicators worldwide. After leaving Chicago to run the futures and options division of the British banking giant Lloyd’s TSB, Shah moved up to Roosevelt & Cross Inc., an old-line New York boutique firm. There he originated and ran a packaged fixed-income trading desk, and established that company’s “listed” and OTC trading desks.
Shah founded a second hedge fund in 1999, which he ran until 2003.
Shah’s vast network of contacts includes the biggest players on Wall Street and in international finance. These contacts give him the real story – when others only get what the investment banks want them to see.
Today, as editor of Hyperdrive Portfolio, Shah presents his legion of subscribers with massive profit opportunities that result from paradigm shifts in the way we work, play, and live.
Shah is a frequent guest on CNBC, Forbes, and MarketWatch, and you can catch him every week on Fox Business’s Varney & Co.
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