Current market turmoil has hurt many stocks, but growth players have had a particularly difficult time. This is because these companies rely on a solid economic environment to expand their businesses and raise earnings – and these days, investors are uncertain about what's ahead.
The reason for market instability? Investors were earlier in the year hoping for an improving economy and ongoing interest rate cuts, but President Donald Trump's announcement of tariff On imports he threatened such a scenario. The concern is that the tariffs will increase prices, pressing corporate earnings and the overall economy. Last week, the chairman of the Federal Fund Jerome Powell said the duties could push inflation higher and could “move us further away from our goals.”
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All of this has driven investors away from stocks that are most sensitive to economic growth, with the idea that they could suffer most in the coming months. But this has also left many of these players trading at deal levels-and that is a sign of buying opportunities for long-term investors. Let's look at one growth stock down 20% so far this year and should be on your purchase list.
Image source: Getty images.
This particular company operates in the consumer goods and technology markets. I'm talking about Hamazon(NASDAQ: AMZN)Leader in e-commerce and cloud computing. Over time, the company has built a strong history of growth, with earnings and earnings on capital invested (ROC) constantly climbing – with only one exception.
During the latest period of high inflation, Amazon suffered, even moving to an annual loss in 2022. But the company made something extremely important: it revamped its costs structure to accelerate recovery, and this move also put it in a better position to excel in the future, through any market environment. Amazon returned to profitability a year later and since then has seen proceeds in advance after a quarter. I would also like to note that Give is once again on progress, showing that Amazon benefits from its investments.
This is all positive, and combined with Amazon's strong e-commerce business-which offers everything from essentials to general goods and entertainment-sets the company well for long-term growth.
But what about the near term? Trump's final tariff plan has not yet been established – the President launched earlier this month tariffs on countries worldwide, then put on a break for 90 days to allow for negotiations. Tariffs of 145% remain active on China, however, and this brings me to the subject of the potential impact on Amazon.
To some extent, Amazon will face headwear because it imports some products from China. This could lead to higher prices that Amazon must absorb or pass on to the consumer. And some third -party vendors on Amazon are based in China; They may no longer decide to sell on the platform if the demand for their products decreases. This could press Amazon's revenue as the company collects various fees from vendors on its platform.
At the same time, though, Amazon could see some benefit from tariffs on China as the company is also facing competition from e-commerce businesses there, such as Shein, which offers low-cost products. If consumers consider these competitors too expensive because of the tariffs, they could turn to Amazon to buy alternative items. This could limit some of the negative impact on the e-commerce giant.
It is also important to remember that Amazon Web Services (AWS), the cloud computing unit, is driving the company's overall profit. While Amazon may face some higher costs here, possibly for hardware, for example, the artificial intelligence (AI) market is thriving. Therefore, AWS could be a significant revenue driver in the quarters and years to come.
So, yes, Amazon may feel some pressure from the import tariffs, but the company has what it takes to manage challenges-as it showed us during the recent advanced inflation-and long-term prospects remain bright. That's why today, trading for earnings estimates just 27 times onwards, Amazon is looking for a very reasonable price and making a great stock to buy on the dip.
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John Mackey, former CEO of Whole Foods Market, a Sub -company from Amazon, is a member of the Board of Directors of the Motley Fool. Adria cimino He has posts in Amazon. The Motley Fool has jobs in and recommends Amazon. The fool has motley and Disclosure Policy.
