By conventional measures of stock prices, Amazon.com looks very expensive.
It's actually surprisingly cheap.
Twenty-one years after it went public, a share of Amazon stock costs 70 times more than the company's estimated per-share future earnings. That means investors are willing to pay much more for each dollar of Amazon's earnings than for shares of Microsoft, Apple, Facebook, Alphabet or Alibaba. The everything store's price-to-earnings ratio is four times higher than that of the S&P 500 index.
Yet even at this valuation, all but one of 52 analysts surveyed by Bloomberg recommend owning the stock, and 48 of them say that investors should buy it and keep it, according to data compiled by Bloomberg.
Which makes Amazon something few analysts ever believed it could become: a value stock, fetching a modest price considering the company’s opportunities for growth.
To understand why Amazon remains a bargain means acknowledging the commitment to create efficiency for consumers by spending more money on more works in progress than anyone. Amazon's market capitalisation just became greater than the combined worth of the leading companies in six different industries where it is a competitor.
The prospectus from the initial sale of Amazon stock on May 14, 1997 said the online bookseller might never make money, and that its operating costs were greater than rivals Barnes & Noble and Borders Group. Within a month, Amazon was down 19 per cent. The company's gross margin (revenue after the cost of goods sold) of 22 cents on the dollar was dwarfed by Barnes & Noble's 36 cents and less than Borders' 27 cents. While first-quarter sales surged to $16 million from $875,000 a year earlier, losses widened to $3m from $331,000.
"I just don't see how they're going to have the muscle to pull this off," McCabe Capital Partners' Steve Zenker told Bloomberg News in May 1997. He was expressing the widespread opinion that Amazon was incapable of trading at a discount relative to dividends, earnings and sales, and that the fundamentals of value investing such as a high dividend yield and low price-to-earnings ratio were impossible for the Seattle internet start-up.
Amazon chief executive Jeff Bezos famously took the opposite view. "It just doesn't make sense to focus on the day-to-day stock price," he told Bloomberg a month after the initial public offering. He said he was "obsessed" with customers because "it's easy in a competitive situation to get totally focused on your competition and lose sight of your bread and butter."
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The strategy of relentlessly innovating by reducing customer costs and increasing convenience at the expense of quarterly earnings helps explain why Amazon shares beat the world and gained 498 per cent during the past five years as the top performer among the 15 companies in the Bloomberg Intelligence Global E-Commerce Index. The also-ran S&P Consumer Discretionary index and S&P 500 advanced 107 percent and 87 percent. It took less than a year for Amazon's market capitalisation of less than $500m to exceed the $2.6 billion of No 1 Barnes & Noble. By 2015, Amazon was worth more than $220bn, exceeding the value of Walmart, even though the world's largest retailer had $505bn in total revenues, more than double Amazon's $193bn at that point.
In the business of leasing information-technology gear, by contrast, Amazon didn't need to play catch-up. "Amazon had over a five-year head start over its rivals in cloud computing, where enterprises rent infrastructure instead of buying it," said Anurag Rana, a senior analyst at Bloomberg Intelligence.
Despite strong growth over the past decade, the cloud computing business represents less than 10 per cent of total information-technology spending, which shows that the cloud has a lot more room to grow in the coming years. This shift in spending is likely to disadvantage legacy tech companies like IBM and Oracle.
Amazon also is competing in video streaming with Netflix, whose market capitalisation still is about a fifth of Amazon's after growing 10 times during the past five years. US President Donald Trump's attacks on Amazon may hasten the company's plans to become an entrenched logistics leader, having already overtaken United Parcel Service in 2009. Few were surprised when Amazon said on June 28 that it was buying PillPack, a nationwide drug network competing with traditional pharmacy chains like including Walgreens Boots Alliance and CVS Health.
Amazon is now worth more about as much as the combined $831bn market capitalisation of six competitors, Barnes & Noble, Walmart, IBM, Oracle, Netflix and UPS. And money managers are showing that they expect this kind of relative strength to persist: 730 non-index mutual funds in the US invested $103bn in Amazon, easily surpassing the $73bn invested by 1,171 non-index funds in the six rivals combined, according to data compiled by Bloomberg.
And Amazon invests huge sums on technology and content spending for future product development, $25bn during the past 12 months. That dwarfs the $18bn spent by another big investor in research and development, Samsung Electronics. The R&D expenses of more than 1,000 global retailers, excluding Amazon, was $9bn for the same period.
"Two facts make Amazon unique," said Jitendra Waral, a senior analyst at Bloomberg Intelligence. "The DNA of the company is to try to cut the number of steps to zero for a consumer to buy goods from Amazon. Amazon wins by constantly changing behaviour through innovation. The company spends eight to 10 years to research new products so it always is thinking much ahead. Amazon's end market is 16 per cent of global gross domestic product, excluding China. To put this in context, if Amazon's end market was the Empire State Building, it still is on the third floor. This gap creates plenty of return-on-investment opportunities for their long-term investments."
That's pretty much the definition of a value stock.
Bloomberg
How to protect yourself when air quality drops
Install an air filter in your home.
Close your windows and turn on the AC.
Shower or bath after being outside.
Wear a face mask.
Stay indoors when conditions are particularly poor.
If driving, turn your engine off when stationary.
BORDERLANDS
Starring: Cate Blanchett, Kevin Hart, Jamie Lee Curtis
Director: Eli Roth
Rating: 0/5
EA%20Sports%20FC%2024
%3Cp%3EDeveloper%3A%20EA%20Vancouver%2C%20EA%20Romania%3Cbr%3EPublisher%3A%20EA%20Sports%3Cbr%3EConsoles%3A%20Nintendo%20Switch%2C%20PlayStation%204%26amp%3B5%2C%20PC%20and%20Xbox%20One%3Cbr%3ERating%3A%203.5%2F5%3C%2Fp%3E%0A
Company Profile
Name: Thndr
Started: 2019
Co-founders: Ahmad Hammouda and Seif Amr
Sector: FinTech
Headquarters: Egypt
UAE base: Hub71, Abu Dhabi
Current number of staff: More than 150
Funds raised: $22 million
Results
%3Cp%3E%3Cstrong%3EStage%207%3A%3C%2Fstrong%3E%3Cbr%3E1.%20Adam%20Yates%20(GBR)%20UAE%20Team%20Emirates%20%E2%80%93%203hrs%2029min%2042ses%3Cbr%3E2.%20Remco%20Evenepoel%20(BEL)%20Soudal%20Quick-Step%20%E2%80%93%2010sec%3Cbr%3E3.%20Geoffrey%20Bouchard%20(FRA)%20AG2R%20Citroen%20Team%20%E2%80%93%2042sec%3Cbr%3E%3Cstrong%3EGeneral%20Classification%3A%3C%2Fstrong%3E%3Cbr%3E1.%20Remco%20Evenepoel%20(BEL)%20Soudal%20Quick-Step%3Cbr%3E2.%20Lucas%20Plapp%20(AUS)%20Ineos%20Grenaders%20%E2%80%93%2059se%3Cbr%3E3.%20Adam%20Yates%20(GBR)%20UAE%20Team%20Emirates%20%E2%80%9360sec%3Cbr%3ERed%20Jersey%20(General%20Classification)%3A%20Remco%20Evenepoel%20(BEL)%20Soudal%20Quick-Step%3Cbr%3EGreen%20Jersey%20(Points%20Classification)%3A%20Tim%20Merlier%20(BEL)%20Soudal%20Quick-Step%3Cbr%3EWhite%20Jersey%20(Young%20Rider%20Classification)%3A%20Remco%20Evenepoel%20(BEL)%20Soudal%20Quick-Step%3Cbr%3EBlack%20Jersey%20(Intermediate%20Sprint%20Classification)%3A%20Edward%20Planckaert%20(FRA)%20Alpecin-Deceuninck%3C%2Fp%3E%0A
Best Academy: Ajax and Benfica
Best Agent: Jorge Mendes
Best Club : Liverpool
Best Coach: Jurgen Klopp (Liverpool)
Best Goalkeeper: Alisson Becker
Best Men’s Player: Cristiano Ronaldo
Best Partnership of the Year Award by SportBusiness: Manchester City and SAP
Best Referee: Stephanie Frappart
Best Revelation Player: Joao Felix (Atletico Madrid and Portugal)
Best Sporting Director: Andrea Berta (Atletico Madrid)
Best Women's Player: Lucy Bronze
Best Young Arab Player: Achraf Hakimi
Kooora – Best Arab Club: Al Hilal (Saudi Arabia)
Kooora – Best Arab Player: Abderrazak Hamdallah (Al-Nassr FC, Saudi Arabia)
Player Career Award: Miralem Pjanic and Ryan Giggs
COMPANY%20PROFILE
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ATP RANKINGS (NOVEMBER 4)
1. Rafael Nadal (ESP) 9,585 pts ( 1)
2. Novak Djokovic (SRB) 8,945 (-1)
3. Roger Federer (SUI) 6,190
4. Daniil Medvedev (RUS) 5,705
5. Dominic Thiem (AUT) 5,025
6. Stefanos Tsitsipas (GRE) 4,000 ( 1)
7. Alexander Zverev (GER) 2,945 (-1)
8. Matteo Berrettini (ITA) 2,670 ( 1)
9. Roberto Bautista (ESP) 2,540 ( 1)
10. Gaël Monfils (FRA) 2,530 ( 3)
11. David Goffin (BEL) 2,335 ( 3)
12. Fabio Fognini (ITA) 2,290
13. Kei Nishikori (JPN) 2,180 (-2)
14. Diego Schwartzman (ARG) 2,125 ( 1)
15. Denis Shapovalov (CAN) 2,050 ( 13)
16. Stan Wawrinka (SUI) 2,000
17. Karen Khachanov (RUS) 1,840 (-9)
18. Alex De Minaur (AUS) 1,775
19. John Isner (USA) 1,770 (-2)
20. Grigor Dimitrov (BUL) 1,747 ( 7)
Greatest of All Time
Starring: Vijay, Sneha, Prashanth, Prabhu Deva, Mohan
COMPANY%20PROFILE
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BEETLEJUICE BEETLEJUICE
Starring: Winona Ryder, Michael Keaton, Jenny Ortega
Director: Tim Burton
Rating: 3/5
HAJJAN
%3Cp%3EDirector%3A%20Abu%20Bakr%20Shawky%C2%A0%3C%2Fp%3E%0A%3Cp%3E%3Cbr%3EStarring%3A%20Omar%20Alatawi%2C%20Tulin%20Essam%2C%20Ibrahim%20Al-Hasawi%C2%A0%3C%2Fp%3E%0A%3Cp%3E%3Cbr%3ERating%3A%204%2F5%3C%2Fp%3E%0A
Company%20Profile
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Company%20Profile
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Israel Palestine on Swedish TV 1958-1989
Director: Goran Hugo Olsson
Rating: 5/5
if you go
The flights
The closest international airport to the TMB trail is Geneva (just over an hour’s drive from the French ski town of Chamonix where most people start and end the walk). Direct flights from the UAE to Geneva are available with Etihad and Emirates from about Dh2,790 including taxes.
The trek
The Tour du Mont Blanc takes about 10 to 14 days to complete if walked in its entirety, but by using the services of a tour operator such as Raw Travel, a shorter “highlights” version allows you to complete the best of the route in a week, from Dh6,750 per person. The trails are blocked by snow from about late October to early May. Most people walk in July and August, but be warned that trails are often uncomfortably busy at this time and it can be very hot. The prime months are June and September.
The biog
Name: Gul Raziq
From: Charsadda, Pakistan
Family: Wife and six children
Favourite holes at Al Ghazal: 15 and 8
Golf Handicap: 6
Childhood sport: cricket
RESULTS
Bantamweight: Jalal Al Daaja (JOR) beat Hamza Bougamza (MAR)
Catchweight 67kg: Mohamed El Mesbahi (MAR) beat Fouad Mesdari (ALG)
Lightweight: Abdullah Mohammed Ali (UAE) beat Abdelhak Amhidra (MAR)
Catchweight 73kg: Mosatafa Ibrahim Radi (PAL) beat Yazid Chouchane (ALG)
Middleweight: Yousri Belgaroui (TUN) beat Badreddine Diani (MAR)
Catchweight 78KG: Rashed Dawood (UAE) beat Adnan Bushashy (ALG)
Middleweight: Sallah-Eddine Dekhissi (MAR) beat Abdel Enam (EGY)
Catchweight 65kg: Yanis Ghemmouri (ALG) beat Rachid Hazoume (MAR)
Lightweight: Mohammed Yahya (UAE) beat Azouz Anwar (EGY)
Catchweight 79kg: Souhil Tahiri (ALG) beat Omar Hussein (PAL)
Middleweight: Tarek Suleiman (SYR) beat Laid Zerhouni (ALG)
Company%C2%A0profile
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Student Of The Year 2
Director: Punit Malhotra
Stars: Tiger Shroff, Tara Sutaria, Ananya Pandey, Aditya Seal
1.5 stars
Blackpink World Tour [Born Pink] In Cinemas
Starring: Rose, Jisoo, Jennie, Lisa
Directors: Min Geun, Oh Yoon-Dong
Rating: 3/5