3. Amazon.com, Inc. (NASDAQ: AMZN)
Vanguard’s Stake Value: $100,911,111,000
Percentage of Vanguard Group’s 13F Portfolio: 2.78%
Number of Hedge Fund Holders: 243
Amazon.com, Inc. (NASDAQ: AMZN) ranks 3rd on the list of 10 best Vanguard stocks to buy now. Amazon.com, Inc. is the biggest online retail platform in the US. The company also offers cloud services with Amazon Web Services (AWS) and provides video-on-demand services through Amazon Prime Video. At the end of the first quarter, Vanguard Group Inc owned 32,614,254 shares of Amazon.com, Inc. (NASDAQ: AMZN) worth $100 billion, representing 2.78% of Vanguard’s investment portfolio. AMZN shares have returned 16% to investors in the past twelve months. The stock has also gained 12% in the past three months.
The company has a market cap of $1.86 trillion. The company’s first-quarter total net sales came in at $108 billion, up from $75.4 billion in the same period in 2020. Amazon.com, Inc. reported a net income of $2.5 billion or $5.09 basic earnings per share. On June 18, JP Morgan maintained a Buy rating on Amazon.com, Inc. (NASDAQ: AMZN), with a price target of $4,600 per share.
At the end of the first quarter of 2021, 243 hedge funds in the database of Insider Monkey held stakes worth $50.4 billion in Amazon.com, Inc. (NASDAQ: AMZN), down from 273 the preceding quarter worth $51.5 billion.
In its Q1 2021 investor letter, investment management firm Polen Capital mentioned Amazon.com, Inc. (NASDAQ: AMZN) and shared their insights on the company. Here is what the fund said:
“We purchased Amazon in February 2021, which accounts for 5% of the Portfolio’s weighting. For most of the last decade, Amazon did not meet our guardrails. We also did not have enough visibility into future free cash flow margins to indicate that the company would sustainably meet our guardrails and, relatedly, if valuation supported the double-digit annualized returns we seek. We now believe we have that visibility.
In 2008, almost all of Amazon’s revenue and operating profits came from its e-commerce business. Amazon Prime and Amazon Web Services (AWS) were new and relatively small back then. The company had roughly 5% operating profit margins overall, entirely from the e-commerce business. In 2009, the company began harvesting its retail business profits to accelerate investment in its distribution and logistics infrastructure globally and very heavily build out and scale AWS data centers. The company’s return on equity began to decline at that time and turned negative for three full years from mid-2012 to mid-2015 (margins and free cash flow declined similarly). So, beginning in 2010 and continuing to mid-2018, Amazon’s business was outside our guardrails. We chose to stick to our guardrails and not on Amazon.” (Click here to see the full text)
