Owning multiple stocks is better than owning just one. Indeed, at the top of The Motley Fool's core investing principles is investing in 25 or more stocks. However, what if an investor could only own a single stock? In that rare scenario, I know what stock I would choose: Amazon (AMZN -0.80%). Let's dig in to see why.
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Amazon's immense scale matters
By nearly every measure, Amazon is a mammoth company. Consider this: Among all American companies, Amazon ranks second in revenue, second in total employees, and fourth in market capitalization.
Moreover, its size is an enormous benefit for an investor who can only own one stock, since they cannot diversify their portfolio. And in that case, the next best alternative is to own a large, diversified company.
Crucially, Amazon operates across multiple industries, including e-commerce, cloud services, and advertising. And in each of these industries, Amazon holds an impressive market share.
First, Amazon Web Services (AWS) is the world's largest cloud services provider. Next, Amazon's huge online retail operation dominates the e-commerce ecosystem, with some reports estimating that 38% of all American e-commerce sales happen on Amazon's website. For comparison, Walmart is second with only a 6% market share. Fi
Finally, Amazon's advertising unit ranks third behind Alphabet and Meta Platforms, but it is growing by leaps and bounds. In its most recent quarter, Amazon's advertising revenue rose to $10.7 billion -- up 22% year over year.
Amazon continues to innovate
A second important reason I'd own Amazon if I could only own one stock is that the company continues to innovate. It has spent billions on research and development (R&D) over the last few years.
And while it's true that some R&D never pays off -- as is always the case -- other projects will likely bear fruit. Supply chain innovations, robotics advancements, and artificial intelligence breakthroughs could lead to Amazon dominating sectors no one thought possible.
After all, Amazon began as an online bookstore. It wasn't until 2005, eight years after the company went public, that Amazon launched its Prime membership program.
Furthermore, the company's enormous cash reserves (nearly $64 billion in cash and equivalents on its balance sheet) mean that it can snap up promising upstarts or established innovators if it so chooses.
Is Amazon a buy now?
For investors willing to hold for the long term, Amazon still looks attractive. Even after rallying 69% year to date, the shares trade at a price-to-sales ratio of 2.7, which remains below the company's 10-year average of 3.1.
AMZN PS Ratio data by YCharts
As far as growth is concerned, analysts expect the company to grow sales 12% in 2024, while earnings per share are forecast to increase to $3.15. More to the point, Amazon's diversified business segments, epic size, and history of innovation mean the company is well-positioned to grow for many years to come. And that's why if I could own only one stock, it would be Amazon.
