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If I Could Buy Only 1 Stock, This Would Be It

By Rick Munarriz - Jun 15, 2021 at 9:05AM

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After being a customer for two dozen years I finally bought into a stock I should have owned sooner.

I've been kicking myself for years -- decades, actually -- for not being an Amazon (AMZN 0.14%) shareholder. I finally gave my kicking leg a rest earlier this month when I bought into the world's leading online retailer.

It's not as if I didn't see the mastery of Amazon. I've been a customer since the early days when it just sold physical books, CDs, and DVDs. I jumped on Prime the moment the platform rolled out. 

I also had a front seat to the stock's success. I helped write some of daily recaps of the original The Fool Portfolio that Tom and David Gardner managed in the late 1990s. Amazon was one of the portfolio's top performers, and even the sudsy pop of the dot-com bubble wasn't enough to vanquish the then novel online retailer. 

Better late than never, I say. I own a small piece of Amazon now. Let's go over why it's the one stock that I'm glad I bought right now. 

A couple holding a credit card finalizing an ecommerce transaction.

Image source: Getty Images.

Bang a gong, Amazon

Amazon isn't a name that's going to seem cheap by most measuring sticks. It trades at four times trailing revenue. That may seem low relative to enterprise software darlings fetching double-digit top-line multiples, but retail is historically a low-margin endeavor with modest mark-ups on merchandise sold. Walmart -- the world's largest retailer -- trades for less than its trailing sales. 

Amazon trading at a little more than 20 times free cash flow and 60 times this year's earnings isn't going to titillate value investors, but knocks when it comes to the stock's valuation start to lose their punch when you consider the stock's all-weather appeal. Amazon shines in all climates, and this matters more than ever right now.

The dot-com darling is obviously pandemic-proof. Net sales accelerated to a 38% surge in 2020, its headiest growth in nine years. Amazon picked up the pace with a 44% gain through the first three months of this year. 

Amazon's resiliency through the COVID-19 crisis isn't exactly a secret recipe. When the pandemic hit, even more of us were ordering groceries and other merchandise from the safety of our homes. We began streaming Prime videos and music as well as Audible audiobooks. All roads led to the empire that Jeff Bezos is leaving behind, but it's not the only challenging time that the country's third most valuable company by market cap has risen above the calamity.

We're talking about 21 consecutive years of double-digit growth, and that covers the dot-com bubble aftermath of 2001 and the Great Recession of 2008. Not to knock the empire that Sam Walton built, but you have to go back more than 13 fiscal years to find the last time that Walmart has come through with double-digit revenue growth. 

Amazon is more than just an internet retailer stock, of course. It's a marketplace for other merchants. It's a cloud-hosting juggernaut through Amazon Web Services. It's a digital content platform. All of these side hustles are worth a valuation premium. Amazon broke the mold, and after cheering it on from the sidelines since the 1990s I'm glad to finally get in the game.  

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Rick Munarriz owns shares of Amazon. The Motley Fool owns shares of and recommends Amazon. The Motley Fool recommends the following options: long January 2022 $1,920 calls on Amazon and short January 2022 $1,940 calls on Amazon. The Motley Fool has a disclosure policy.

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