Trends Are Changing, But Amazon Is Still A Winner

This past month, we saw Amazon.com Inc. (NASDAQ:AMZN) in the U.S. and Shopify Inc. in Canada rise to historically high levels. E-commerce activity and online transactions volumes have shot through the roof as consumers have been forced to shop at home, either on Amazon or other e-commerce sites largely run by Shopify (TSX:SHOP).

The secular growth trend supporting the meteoric rise of both Shopify and Amazon remains strong. With the COVID-19 pandemic highlighting the strength of said secular growth, one will easily see the outperformance of these two companies relative to the broader market.

Amazon’s market dominance and decision to reinvest in its own business in recent decades has turned out to be incredibly prudent. The company is now a cash flow generation machine, pumping out higher levels of profitability every quarter. I expect the company’s long-term trajectory to be overshadowed only by its near-term strength due to COVID-19.

Amazon falls into the rare group of companies that will actually benefit from the coronavirus pandemic, as the shift from bricks-and-mortar shifts to e-commerce and Amazon’s platform. The company’s health and pharmacy segment, which is a small but growing piece of Amazon’s portfolio, is growing much faster than expected as consumers are forced to look into e-commerce solutions for this market segment. For those looking for "safe" growth, Amazon stock indeed seems like the place to go.

Invest wisely, my friends.