It's no secret that the surest path to long-term success in the stock market is investing in the best companies you can find and holding them for years or even decades. That said, the recent bear market has sent many investors scrambling for the sidelines. That's understandable, considering the recent performance of the Nasdaq Composite Index, which continues to languish in bear market territory, down 25% from its peak.

Seasoned investors know that downturns are the best time to buy quality companies at a discount. Why? Because every bear market in history has eventually given way to a bull market, enriching those that used the downturn as a buying opportunity. In fact, analysts are particularly bullish about the potential for one beaten-down growth stock. In fact, if Wall Street is right, this stock is set to soar 52% over the coming 12 months.

Two people with credit card and smartphone.

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Growth of this household name has slowed to a crawl

As one of the pioneers in the space, Amazon (AMZN -2.99%) became the face of e-commerce in the U.S., helping usher in the dawn of digital sales. With its signature smile-logoed boxes, the company became a household name. Since then, Amazon has taken its place as the dominant force in e-commerce. It's the world's largest online retailer and second-largest retailer, period

Over the last couple of years, however, Amazon's fortunes appear to have changed. The end of a pandemic-fueled growth spurt, rising interest rates, high inflation, and a broad-based market downturn have hobbled the former high-flyer, inhibiting the company's growth and scattering fair-weather investors to the four winds. Net sales grew just 9% year over year, and Amazon was unprofitable in 2022 -- the first time the company has lost money since 2014. This was in stark contrast to revenue that grew 44% and profits that soared 220% at the height of the pandemic. 

Amazon's slowing growth has some investors looking for greener fields, and the stock is still down 46% off its peak.

A look under the hood

While Amazon's recent performance would certainly give investors pause, a look under the hood shows things aren't nearly as bad as they might seem. For example, the strong dollar has been a significant drag on Amazon's results. While net sales increased just 9% year over year, adjusting for foreign currency headwinds, sales actually increased 13% compared to 2021. 

Furthermore, Amazon generated a net loss of $2.7 billion in 2022, but this also has an asterisk. The company's stake in Rivian Automotive lost ground last year, following the broader market lower. As a result, Amazon suffered a paper loss of $12.7 billion on the electric car maker in 2022, compared to a paper gain of $11.8 billion from this investment in 2021. Without said loss, Amazon would have been profitable.

This suggests that while things appear bleak, many of the company's challenges result from the current headwinds. Once economic conditions improve, Amazon's fortunes should improve as well.

A significant recovery is on the horizon

Amazon has taken a number of steps to position itself for the inevitable rebound to come.

The company's workforce ballooned during the worst of the pandemic, growing from 798,000 in late 2019 to more than 1.6 million in early 2021. Amazon has pivoted in the wake of stagnant sales growth and economic headwinds. The company revealed plans to cut 18,000 employees in January.

Recent reports suggest a second round of layoffs, affecting another 9,000 employees, bringing its total job cuts to roughly 27,000, or roughly 8% of the company's total headcount. Amazon is also reportedly reducing its employee stock awards over the next couple of years as part of a broader revamp of its compensation. 

Furthermore, reports of the death of e-commerce have been greatly exaggerated. Online shopping has become a way of life for many people, and Amazon gained first-mover advantage when it helped usher in this strong and growing secular trend. E-commerce is becoming a larger part of overall sales and is expected to grow from 20.8% of total retail in 2023 to 24% by 2026.

Cloud computing is another area where the company leads. Amazon Web Services (AWS) controlled 32% of worldwide cloud infrastructure spending in the fourth quarter. Overall, the cloud services market is expected to be worth $1.6 trillion by 2030, a compound annual growth rate of 17%, according to Precedence Research. As the industry leader, Amazon is well-positioned to reap the rewards of this continuing trend.

Wall Street is overwhelmingly bullish on Amazon

Many on Wall Street believe the sell-fest has simply gone too far. Of the 47 analysts who cover Amazon, 43 rate it a buy or strong buy, and not a single one recommends selling. Evercore ISI analyst and Wall Street veteran Mark Mahaney is the most optimistic among his Wall Street peers, assigning a price target of $155 and a buy rating on the shares.

Mahaney notes that the long-term thesis for Amazon is "very much intact," highlighting the company's leading positions in e-commerce and cloud computing, and its growing position in online advertising. If his research is on the mark, the stock could surge 52% over the coming 12 to 18 months, profiting Amazon shareholders along the way.

The stock has rarely been cheap, but at less than 2 times next year's sales, Amazon is squarely in bargain-basement territory and a compelling opportunity at its current valuation.

With multiple catalysts to drive a recovery, a deeply discounted stock price, and an overwhelming endorsement from Wall Street, now is the time to buy Amazon in advance of a robust rebound to come.