Amazon Selloff Could Benefit Long-Term Investors

AMZN is a global technology company, specializing in online retail shopping services and cloud computing services. The name has become ubiquitous for many consumers and sellers alike.

But like many other stocks, AMZN has gone through a bad period of forced selling recently. Each red bar in the chart below signals unusually large volumes in AMZN shares. They reflect our proprietary Big Money outflow signal, pushing the stock lower:

It’s no wonder AMZN shares are down 22% this year. MAPsignals data shows how Big Money investors are shedding this quality name.

Amazon Shares Down, Time to Buy?

When best-of-breed stocks are sold hard, history shows it’s often a buying opportunity for long-term investors. Institutional volumes reveal plenty. Each red bar below signals unusually large outflow volumes in AMZN shares:

Look at the stretch in 2022 – red bars for nearly a year. Capitulation was in full effect and share values fell. But those who bought during that time have profited handsomely since, even with the latest dips.

See, despite the near-term volatility, there’s a powerful fundamental story happening with Amazon.

Amazon Fundamental Analysis

A healthy fundamental backdrop makes this company worth investigating. As you can see, AMZN has had strong sales growth and healthy profits:

• 1-year sales growth rate (+11%)
• 3-year sales growth rate (+10.7%)
• Profit margin (+9.3%)

Source: FactSet

Also, EPS is estimated to ramp higher this year by +20.3%.

AMZN has a track record of strong financial performance.

Marrying great fundamentals with our proprietary software has found some big winning stocks over the long term.

Amazon has been a top-rated stock at MAPsignals. That means the stock has unusual buy pressure and growing fundamentals. We have a ranking process that showcases stocks like this on a weekly basis.

It’s made the rare Top 20 report multiple times in the last decade. The blue bars below show when AMZN was a top pick…sending shares higher:

There haven’t been many Top 20 signals from 2021 on. But look at the Big Money buys that preceded that period. Share values flew higher then and since. So, those brave enough to buy when the stock was down were rewarded.

Tracking unusual volumes reveals the power of money flows.

This is a trait that most outlier stocks exhibit…the best of the best. Big Money demand drives stocks upward.

Amazon Price Prediction

Given the fundamentals, it wouldn’t surprise to see the stock rise once again with Big Money support. Great companies don’t stay down forever.

Big Money selling in the shares is signaling to take notice. Given the historical gains, strong fundamentals, and recent big selling, this stock could be worth a spot in a diversified portfolio.

Disclosure: the author holds long positions in AMZN in personal and managed accounts at the time of publication.

If you are a Registered Investment Advisor (RIA) or are a serious investor, take your investing to the next level, learn more about the MAPsignals process here.