Is Amazon stock a buy amid reports it is targeting overseas cargo transportation?

By: Motiur Rahman
Motiur Rahman
Md Motiur enjoys researching how companies are solving challenges the world will face over the coming decades. In his… read more.
on Oct 13, 2021
  • Amazon shares on Wednesday edged higher 1% amid reports it is in the market for long-range cargo jets.
  • The company is also reportedly looking to hire associated flight crews to help transport cargo overseas.
  • The source said it plans to buy 10 Airbus A330-300 aeroplanes and an unspecified number of the 777-300ERSF.

On Wednesday, Amazon.com Inc. (NASDAQ:AMZN) shares edged higher 1% amid reports the e-commerce giant is in the market for long-range cargo jets. According to the report, the company is also looking to hire associated flight crews in its bid to launch an overseas cargo transportation service. 

The source also said Amazon plans to buy 10 Airbus A330-300 aeroplanes plus an unspecified number of converted cargo versions of the Boeing 777, also known as the 777-300ERSF.

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Analysts believe Amazon’s increased activity in cargo transportation increases competition to United Parcel Services Inc. (NYSE:UPS) and FedEx Corp (NYSE:FDX). Moreover, if successful, Amazon will be able to transport goods from China and other overseas markets boosting its global business.

Amazon’s exciting growth

From a valuation perspective, Amazon shares trade at a steep P/E ratio of 56.59, making the stock less attractive to value investors.

However, analysts expect the online retail giant’s earnings per share to grow by nearly 82% this year, before rising at an average annual rate of about 37% over the next five years.

Therefore, growth investors could find the stock as an exciting addition to the portfolios.

Source – TradingView

Is the rebound poised to continue?

Technically, Amazon shares seem to have recently bounced off the trendline support of an ascending channel formation. However, the stock is still far from crossing the 100-day moving average and has room to run before reaching overbought conditions.

Therefore, investors could target extended gains at about $3,387 or higher at $3.501. On the other hand, if the stock pulls back prematurely, it could find support at $3,174, or lower at $3,065.

It is not too late to buy AMZN

In summary, although Amazon shares are up nearly 3% since the 4th of October, the stock is far from reaching overbought conditions, thus leaving room for more upward movements. 

Therefore, given the company’s exciting growth prospects, it may not be too late to invest in AMZN shares.

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