Daily Stock Pick: January 9th, 2023

Stocks were looking to add to Friday’s gains to kick off the week as investors consider the possible implications of encouraging wage growth data on future Fed moves. Investors are hopeful that the U.S. economy is cooling off and that the Fed is finished with its most aggressive action. If inflation has peaked and the worst is behind us, certain stocks are set up to potentially gain. Today we’ll look at a desirable tech stock that should get a boost as inflation subsides.  

As price increases slow down, consumers may spend more, providing a boost to some battered consumer discretionary names. Amazon (AMZN) tops our list of stocks to consider on peaking inflation as its share price has been nearly cut in half this year on higher inflation and rising rates.

Amazon is by far the world’s largest e-commerce company and, in 2021, surpassed Walmart as the world’s largest retailer outside of China. Without a direct competitor in the U.S., the company has experienced rapid growth through its third-party marketplace. The company operates 110 fulfillment centers worldwide, with 110 in the U.S.

Amazon’s business model has built-in advantages like its subscription service, Prime, and streaming platform. The service has more than 200 million subscribers globally and 163.5 million in the U.S. That figure is expected to continue to expand at a steady pace. According to a report by Statista, U.S. Prime members are expected to reach more than 176.5 million by 2025.    

The e-commerce market may continue to suffer in the coming months amid recession fears. Nevertheless, the $9 trillion industry is expected to expand at a CAGR of 14.7% for at least the next four years. Considering the online shopping behemoth held five times the market share of its closest rival, Walmart, its 38% leading market share, means it will likely gain the most significant advantage from the market’s growth.    

The tech sector took a beating in 2022, creating opportunities in some desirable names. Citi and Goldman Sachs recently named the tech titan as one of their top picks for 2023, echoing the sentiment of many of Wall Street’s pros. Of 53 analysts offering recommendations for AMZN, 48 call it a Buy, and 4 call it a Hold. There are no Sell recommendations for the stock. A median price target of $135 represents a 57% upside from Friday’s closing price.