In Portfolio Spotlight Series 2 – I will be going through each holding in my portfolio v2.0 and the selection criteria for its entry. Stocks are either
1. Great companies with consistent earnings, free cash flow, strong competitive moats. These are core holdings.
2. Potential growth companies with breakout earnings, growing competitive moats. These are holdings which typically are kept within 5% of the portfolio.
3. Geographical / sector diversifications. These are meant for diversification purpose and are kept within 5% if they are from emerging markets (e.g. China/HK) .
Next up in Portfolio Spotlight Series 2 is AMZN. It currently occupies 28% of my portfolio and I have strong conviction in this stock mid to long-term. I have since rebalance it to 5% of my portfolio weightage and taken profit.
Amazon.com, Inc. engages in the provision of online retail shopping services. It operates through the following business segments: North America, International, and Amazon Web Services (AWS). The North America segment includes retail sales of consumer products and subscriptions through North America-focused websites such as http://www.amazon.com and http://www.amazon.ca. The International segment offers retail sales of consumer products and subscriptions through internationally-focused websites. The Amazon Web Services segment involves in the global sales of compute, storage, database, and AWS service offerings for start-ups, enterprises, government agencies, and academic institutions. The company was founded by Jeffrey P. Bezos in July 1994 and is headquartered in Seattle, WA.
1)Consistent Revenue Growth
2)Consistent Free Cash Flow
AMZN has been having consistent free cash flow for the past 8 years !
3)Market Cap Growth
As of September 2021 Amazon has a market cap of $1.761 Trillion. This makes Amazon the world’s 5th most valuable company by market cap according to our data.
4)Consistent Net Income Multiple
AMZN has had consistent net income multiple. This indicates a management team which is efficient in handling its bottom line. A great management team is very important!
5) Future growth
This last factor is fundamental analysis. Does AMZN have future market growth driver(s) ? The answer is yes !
Most of AMZN future growth drivers will leverage on
1. Amazon Web Services (AWS)
2. Amazon Prime
3. Amazon India
4. Amazon’s third leg of business (Other than AWS, E-Commerce)
- Amazon’s online pharmacy platform
- its fashion initiatives, or
- its Amazon Fresh grocery store footprint