Buy Amazon Today And Retire Rich Tomorrow

This correction has been glorious for long-term investors who understand one simple fact.

Time Frame (Years)

Total Returns Explained By Fundamentals/Valuations

1 Day 0.01% 1 month 0.25% 3 month 0.75% 6 months 1.5% 1 3% 2 6% 3 23% 4 31% 5 39% 6 47% 7 55% 8 62% 9 70% 10 78% 11+ 90% to 97%

(Sources: DK S&P 500 Valuation And Total Return Potential Tool, JPMorgan, Bank of America, Princeton, RIA)

• over 12 months, luck is 33X as powerful as fundamentals
• over 11+ years, fundamentals are 11X as powerful as luck
• over the very long-term fundamentals are 33X as powerful as luck

This correction has been historically normal, healthy, and perfectly sensible given that the bond market is predicting six or seven Fed rate hikes by mid-2023.

But notice how not all tech stocks are being affected equally. Some are barely down at all, while Amazon (AMZN) is in a bear market.

Let me show you the four reasons why I just bought more Amazon, ahead of earnings, and you might want to do the same.

While I can't predict how the market will react to Amazon's results, which come out Thursday after the close, I can tell you that anyone who buys Amazon at current prices is likely to feel like a stock market genius in 5+ years.

Or, to put it another way, buy Amazon today and you'll likely thank me tomorrow.

Reason One: Amazon Is Potentially Poised For A Major Post Earnings Beat Pop

This earnings season we've seen most big-cap tech crush expectations and deliver fantastic results. Sometimes the market has reacted with a relative yawn.

And other times with single-day pops as high as 11% in the case of Alphabet (GOOG) (intra-day peak).

Here's why I took advantage of the tech correction to buy more Amazon ahead of earnings.

Amazon's historical track record on beating cash flow estimates is very strong.

Right now its trading at 17.5X forward cash flow, historically 29% undervalued.

• 36% growth expected in 2022
• a year of very easy comps
• potentially making AMZN a good candidate for pre-earnings buys and post earnings pops

• as Amazon achieves greater economies of scale earnings beats have become far more common
• and often very large beats
• EPS, while not the ideal metric to focus on, is what trading algos are scanning in press releases
• I do not advocate market timing
• I am saying that AMZN's current valuation is so low, and expectations are likely modest creating the potential for a strong post-earnings pop
• In other words, AMZN's recent correction low might be as low as the stock falls baring a 15% to 20% S&P correction in 2022

Want to know why it's worth buying Amazon into earnings this year?

Metric 2020 Growth 2021 Growth Consensus 2022 Growth Consensus 2023 Growth Consensus 2024 Growth Consensus 2025 Growth Consensus

2026 Growth Consensus

Sales 36% 21% 17% 18% 11% 13% 12% EPS 82% -2% 23% 50% 45% 35% 27% Operating Cash Flow 70% -6% 37% 31% 63% 20% 16% Free Cash Flow 19% -65% 233% 58% 73% 31% 24% EBITDA 28% 74% 19% 29% NA NA NA EBIT (operating income) 53% 5% 36% 49% NA NA NA

(Source: FAST Graphs, FactSet Research)

Because growth is expected to be explosive not just this year, but for the foreseeable future.

So that's why it might be worth buying some Amazon before earnings.

• keep some cash in reserve to buy more should it fall after good results, as it has for the last several quarters
• and also should the broader market roll over again as it did in January

Reason Two: One Of The Highest Quality Companies On Earth

The Dividend King's overall quality scores are based on a 233 point model that includes:

• dividend safety

• balance sheet strength

• credit ratings

• credit default swap medium-term bankruptcy risk data

• short and long-term bankruptcy risk

• accounting and corporate fraud risk

• profitability and business model

• growth consensus estimates

• cost of capital

• long-term risk-management scores from MSCI, Morningstar, FactSet, S&P, Reuters'/Refinitiv and Just Capital

• management quality

• dividend friendly corporate culture/income dependability

• long-term total returns (a Ben Graham sign of quality)

• analyst consensus long-term return potential

It actually includes over 1,000 metrics if you count everything factored in by 12 rating agencies we use to assess fundamental risk.

How do we know that our safety and quality model works well?

During the two worst recessions in 75 years, our safety model predicted 87% of blue-chip dividend cuts during the ultimate baptism by fire for any dividend safety model.

How does AMZN score on one of the world's most comprehensive and accurate safety models? Just take a look.

AMZN Balance Sheet Safety

Rating Dividend Kings Safety Score (144 Point Safety Model) Approximate Dividend Cut Risk (Average Recession)

Approximate Dividend Cut Risk In Pandemic Level Recession

1 - unsafe 0% to 20% over 4% 16+% 2- below average 21% to 40% over 2% 8% to 16% 3 - average 41% to 60% 2% 4% to 8% 4 - safe 61% to 80% 1% 2% to 4% 5- very safe 81% to 100% 0.5% 1% to 2% AMZN 100% NA NA Risk Rating Medium-Risk (53rd percentile risk management consensus) AA stable 0.51% 30-year bankruptcy risk

20% OR LESS Max Risk Cap Recommendation (Individual Companies)

Long-Term Dependability

Company DK Long-Term Dependability Score Interpretation Points Non-Dependable Companies 21% or below Poor Dependability 1 Low Dependability Companies 22% to 60% Below-Average Dependability 2 S&P 500/Industry Average 61% (58% to 70% range) Average Dependability 3 Above-Average 71% to 80% Very Dependable 4 Very Good 81% or higher Exceptional Dependability 5 AMZN 85% Exceptional Dependability 5

Overall Quality

AMZN Final Score Rating Safety 101% 5/5 very safe Business Model 80% 3/3 wide moat Dependability 85% 5/5 exceptional Total 93% 13/13 Ultra SWAN Risk Rating

2/3 Medium-Risk

20% OR LESS Max Risk Cap Rec (Speculative)

5% Margin of Safety For A Potentially Good Buy

AMZN: The 7th Highest Quality Master List Company (Out of 510) = 99th Percentile

The DK 500 Master List includes the world's highest quality companies including:

• All dividend champions

• All dividend aristocrats

• All dividend kings

• All global aristocrats (such as BTI, ENB, and NVS)

• All 13/13 Ultra Swans (as close to perfect quality as exists on Wall Street)

• 46 of the world's best growth stocks (on its way to 50)

AMZN's 93% quality score means its similar in quality to such blue-chips as

• Microsoft (MSFT)
• Adobe (ADBE)
• Stanley Black & Decker (SWK) - dividend king
• T. Rowe Price (TROW) - dividend aristocrat
• Lowe's (LOW) - dividend king
• Alphabet (GOOG)
• Novartis (NVS) - global aristocrat
• Unilever (UL) - global aristocrat
• Johnson & Johnson (JNJ) - dividend king

Even among the highest quality companies on earth, AMZN is higher quality than 99% of them.

Why is Amazon such a quality powerhouse?

AMZN Credit Ratings Rating Agency Credit Rating 30-Year Default/Bankruptcy Risk Chance of Losing 100% Of Your Investment 1 In S&P AA stable 0.51% 196.1 Fitch AA- stable 0.55% 181.8 Moody's A1 (A+ equivalent) stable 0.60% 166.7 Consensus AA- stable 0.55% 180.7

(Sources: S&P, Moody's, Fitch)

How about an AA-credit rating which means an approximate 1 in 181 chance of losing all your money in the next 30 years?

AMZN Leverage Consensus Forecast Year Debt/EBITDA Net Debt/EBITDA (3.0 Or Less Safe According To Credit Rating Agencies)

Interest Coverage (8+ Safe)

2020 0.56 -0.09 13.90 2021 0.72 -0.33 13.51 2022 0.60 -0.43 15.57 2023 0.44 -0.68 23.60 2024 0.36 -1.26 38.77 2025 0.29 -1.43 48.22 2026 0.24 -1.63 60.31 Annualized Change -12.89% 62.50% 27.71%

(Source: FactSet Research Terminal)

AMZN has a fortress balance sheet that keeps getting stronger over time.

AMZN is potentially on track to become the 3rd AAA-rated company in America (JNJ and MSFT already have one).

AMZN Balance Sheet Consensus Forecast Year Total Debt (Millions) Cash Net Debt (Millions) Interest Cost (Millions) EBITDA (Millions) Operating Income (Millions) 2020 $31,816 $42,122 -$5,079 $1,647 $57,284 $22,899 2021 $49,555 $71,112 -$22,465 $1,786 $68,972 $24,123 2022 $48,617 $94,061 -$34,796 $2,020 $81,278 $31,451 2023 $47,117 $141,412 -$72,321 $2,096 $106,599 $49,471 2024 $49,190 $236,996 -$172,669 $1,849 $136,643 $71,686 2025 $48,774 $350,159 -$241,801 $1,951 $168,551 $94,082 2026 $48,774 $491,147 -$328,134 $2,001 $201,002 $120,686 Annualized Growth 7.38% 49.74% 141.47% 3.30% 23.27% 31.92%

(Source: FactSet Research Terminal)

By 2026, AMZN is expected to have almost $500 billion in cash and $328 billion in net cash.

• Apple's (AAPL) peak net cash position was $200 billion and its cash position never rose above $250 billion
• If AMZN grows as expected, buybacks and dividends become a mathematical necessity within a few years

AMZN Bond Profile

• $30 billion more cash than debt
• almost $90 billion in liquidity
• well staggered bond maturities
• almost all unsecured bonds (maximum financial flexibility)
• the bond market is so confident in AMZN's growth strategy its willing to lend to it for 39 years at 3.2%

AMZN Credit Default SWAPs: The Bond Market's Real-Time Fundamental Risk Assessment

Credit default swaps are insurance policies bond investors take out against defaults.

• they represent real-time fundamental risk-assessments from the "smart money" on Wall Street

AMZN's CDS spreads have remained relatively stable even as the price has plunged in recent weeks.

• analysts, rating agencies, and the bond market all agree that AMZN's thesis remains intact
• the price plunge was not justified by fundamentals

AMZN Profitability: Wall Street's Favorite Quality Proxy

Amazon's profitability is historically in the top 20% of its peers, despite its famous love of huge growth spending.

AMZN Trailing 12-Month Profitability Vs Peers Metric Industry Percentile Major Cyclical Retailers More Profitable Than AMZN (Out Of 1,088) Operating Margin 61.99 NA Net Margin 69.03 337 Return On Equity 83.73 177 Return On Assets 77.46 245 Return On Capital 62.96 403 Average 71.03 315

(Source: GuruFocus Premium)

AMZN's profitability has fallen a bit in the last year due to aggressive growth spending (and pandemic costs).

Industry-leading profitability that's stable over 20+ years confirms AMZN's wide and stable moat.

AMZN Profit Margin Consensus Forecast Year FCF Margin EBITDA Margin EBIT (Operating) Margin Net Margin Return On Capital Expansion

Return On Capital Forecast

2020 8.0% 14.8% 5.9% 5.5% 2.53 2021 2.7% 14.7% 5.1% 4.5% TTM ROC 19.91% 2022 6.6% 14.8% 5.7% 4.7% Latest ROC 10.23% 2023 8.9% 16.5% 7.7% 6.4% 2026 ROC 50.44% 2024 10.2% 18.7% 9.8% 8.0% 2026 ROC 25.92% 2025 11.9% 20.4% 11.4% 9.6% Average 38.18% 2026 16.1% 21.6% 13.0% 10.9% Industry Median 11.23% Annualized Growth 12.23% 6.49% 13.96% 12.00% AMZN/Peers 3.40 Vs S&P 2.62

(Source: FactSet Research Terminal)

AMZN's margins are expected to grow at very impressive rates, up to 5X for FCF margins by 2026.

Its returns on capital are expected to rise to 3.4X its industry peers, and almost 3X that of the S&P 500, while delivering 3X faster growth.

• return on capital is pre-tax profit/operating capital (the money it takes to run the business)
• Joel Greenblatt's gold standard for profitability and moatiness

And this expected margin growth, some of the strongest on Wall Street, is despite growth spending that has to be seen to be believed.

AMZN Growth Spending Consensus Forecast Year SG&A (Selling, General, Administrative) R&D Capex Total Growth Spending Sales Growth Spending/Sales 2020 $28,677 $37,677 $35,046 $101,400 $386,064 26.27% 2021 $38,687 $49,995 $53,894 $142,576 $470,337 30.31% 2022 $43,880 $62,078 $54,009 $159,967 $550,982 29.03% 2023 $49,935 $70,589 $59,913 $180,437 $645,711 27.94% 2024 $54,615 $78,742 $63,877 $197,234 $731,227 26.97% 2025 $61,402 $81,404 $58,053 $200,859 $825,889 24.32% 2026 $67,349 $89,277 $60,246 $216,872 $928,778 23.35% Annualized Growth 15.29% 15.46% 9.45% 13.51% 15.76% -1.94%

(Source: FactSet Research Terminal)

• for context the US government spends $140 billion on R&D each year
• Amazon's R&D budget could eventually surpass that of the US government's
• Amazon's growth spending from 2020 through 2026 is estimated at $1.2 trillion
• equal to the 10-year infrastructure bill Congress passed in 2021

Amazon over the next 10 years could spend more on R&D and growth than the US government.

• all while margins continue moving higher
• and the bottom line grows at close to 30%

And that brings us to the biggest reason that Amazon is my top priority blue-chip for this and all future corrections.

Reason Three: One of The Greatest Growth Stories Of All Time

Amazon is generating revenues that are larger than the economies of most countries.

AMZN Medium-Term Growth Consensus Forecast Year Sales Free Cash Flow EBITDA EBIT (Operating Income) Net Income 2020 $386,064 $31,018 $57,284 $22,899 $21,331 2021 $470,337 $12,524 $68,972 $24,123 $21,092 2022 $550,982 $36,351 $81,278 $31,451 $26,033 2023 $645,711 $57,246 $106,599 $49,471 $41,356 2024 $731,227 $74,317 $136,643 $71,686 $58,341 2025 $825,889 $98,481 $168,551 $94,082 $78,893 2026 $928,778 $149,080 $201,002 $120,686 $101,285 Annualized Growth 15.76% 29.91% 23.27% 31.92% 29.64%

(Source: FactSet Research Terminal)

And yet it's still growing at 16% on the top line and its bottom line is growing about twice as fast.

AMZN Dividend/Buyback Potential Consensus Forecast Year Dividend Consensus FCF/Share Consensus Payout Ratio Retained (Post-Dividend) Cash Flow Buyback Potential Debt Repayment Potential 2021 $0.00 $26.66 0.0% $13,517 0.93% 27.3% 2022 $0.00 $62.06 0.0% $31,464 2.15% 63.5% 2023 $0.00 $97.67 0.0% $49,519 3.39% 101.9% 2024 $0.00 $168.92 0.0% $85,642 5.86% 181.8% 2025 $0.00 $220.83 0.0% $111,961 7.67% 227.6% 2026 $0.00 $272.96 0.0% $138,391 9.48% 283.7% Total 2021 Through 2026 $0.00 $849.10 0.0% $430,493.70 29.48% 868.72% Annualized Rate NA 78.04% NA 78.04% 78.04% 78.04%

(Source: FactSet Research Terminal)

No dividends or buybacks are expected for the foreseeable future but AMZN's retained cash flows are so large, and its annual FCFs are growing so quickly that eventually buybacks and dividends become a mathematical certainty if AMZN grows as expected.

• capital return program will put even Apple's to shame

And now take a look at the long-term outlook on Amazon.

AMZN Long-Term Growth Outlook

• 24.9% CAGR median growth consensus from all 52 analysts covering Amazon
• 24.9% to 34.7% CAGR growth consensus range
• smoothing for outliers historical margin of error is 15% to the downside and 45% to the upside
• 21% to 51% historical margin-of-error adjusted growth consensus range
• approximately 70% statistical chance that AMZN grows operating cash flow at 21% to 51% CAGR over the next five years

Amazon's hyper-growth is expected to continue for the foreseeable future, just as it has for the last two decades.

Ok, so those are some impressive analyst forecasts, but what is going to actually allow Amazon to grow at such a torrid rate when it's already so massive?

Amazon's Growth Drivers: AWS And Advertising

The key to Amazon converting 16% sales growth into 25% bottom-line growth is that its two fastest-growing businesses are also its two most profitable.

Amazon Web Services Growth And Margin Consensus Forecast

Year AWS Consensus Sales AWS Consensus Operating Income AWS Consensus EBITDA AWS Consensus Operating Margin AWS Consensus EBITDA Margin 2020 $45,370 $13,531 $22,954 29.82% 50.59% 2021 $61,667 $18,178 $31,680 29.48% 51.37% 2022 $79,837 $23,326 $41,664 29.22% 52.19% 2023 $99,698 $29,185 $54,300 29.27% 54.46% 2024 $123,162 NA $65,161 NA 52.91% 2025 $129,159 NA $76,889 NA 59.53% 2026 $145,950 NA NA NA NA Annualized Growth 21.50% 29.20% 27.35% -0.62% 3.31%

(Source: FactSet Research Terminal)

AWS is growing sales at 22% and margin expansion is expected to convert that into nearly 30% cash flow growth.

"The global cloud computing market size is expected to reach USD 1,251.09 billion by 2028, registering a CAGR of 19.1% over the forecast period. This growth can be attributed to several factors, including digital transformation across various industries, a surge in internet penetration, and big data consumption in various verticals. Increasing adoption of 5G, Internet of Things (IOT), and Artificial Intelligence (AI) is expected to further support the growth of the market for cloud computing." - Yahoo Finance

Cloud computing is a massive and fast-growing industry, that's growing at 19%. Guess who is the global king of cloud computing?

Amazon's cloud market share has been stable at 32% for four years. It's the largest cloud computing company on earth.

Margins on AWS are expected to remain stable or improve slightly despite strong competition from MSFT and GOOG.

But as great as AWS is, it pales in comparison to Amazon's advertising business.

Advertising Consensus Forecast

Year Advertising Revenue Total Sales Advertising As % Of Sales Operating Income (45% Operating Margin)

Potential Market Value ($ Billions)

2020 $15,730 $386,064 4.07% $7,079 $325,611.00 2021 $28,132 $470,337 5.98% $12,659 $582,332.40 2022 $37,347 $550,982 6.78% $16,806 $773,082.90 2023 $48,778 $645,711 7.55% $21,950 $1,009,704.60 2024 NA $731,227 NA NA NA 2025 NA $825,889 NA NA NA 2026 NA $928,778 NA NA NA Annualized Growth 45.82% 15.76% 22.85% 45.82% 45.82%

(Source: FactSet Research Terminal)

Piper Jaffrey estimates 75% operating margins for advertising, but even using the low end of the industry norm (45%) we can see that Amazon's advertising business could be worth $1 trillion by 2023.

What AWS Could Be Worth Year Potential Market Value ($ Billions) 2020 $392,399.00 2021 $527,162.00 2022 $676,454.00 2023 $846,365.00 Annualized Growth 29.2%

(Source: FactSet Research Terminal)

AWS + Advertising could be worth almost $2 trillion by the end of 2023.

• AMZN's current market cap is under $1.5 trillion
• the market is currently valuing Amazon's retail business at -$300 billion

Is Amazons' retail business, which is currently 71% of sales, worth -$300 billion? Almost certainly not.

Amazon is rapidly gaining market share in advertising and here's why.

• a study found that Amazon's ads have 70% higher conversion rates and 65% lower costs per click
• another study concluded that AMZN's advertising is about 4X more profitable than GOOG's

Basically, AMZN knows shoppers better than anyone on earth and is able to market to them most effectively.

Amazon is the #3 digital ad company on earth and that market share is expected to keep climbing over time.

The online ad market is already almost $500 billion size and is expected to double by 2025.

• Amazon advertising is growing 3X faster than the industry as a whole

Let me repeat that. Amazon is rapidly gaining market share in a future $1 trillion addressable market that's growing at 16% per year.

AWS has 30% operating margins, Advertising potentially as much as 75%.

• Amazon's fastest-growing businesses are also its more lucrative
• driving very strong potential margin expansion

A Global Growth Powerhouse

Almost 40% of sales are from outside North America.

• operating income from international sales are expected to grow at 69% through 2023
• vs 27% for North American operating income

In other words, Amazon has many worlds left to conquer and one of the longest growth runways of any Ultra SWAN on Wall Street.

• Amazon Prime had 150 million US members in 2020
• and 50 million global members
• Prime is expected to soon surpass Netflix as the #1 streaming service on earth

AMZN Prime members spend nearly 4X more than non-prime members.

• AMZN Prime members provide AMZN with the data it needs for artificial intelligence learning that improves AWS, advertising, and allows it to branch out into new growth markets

This is how Amazon can potentially deliver 36% cash flow growth in 2022, 31% in 2023, and 25% growth for several years beyond that.

But as if being one of the world's highest quality and safest companies, as well as one of the fastest-growing wasn't enough, then we come to valuation.

Bottom line? Amazon is stupid cheap, and the fattest long-term pitch on Wall Street.

Reason Four: A Wonderful Company At A Wonderful Price

For two decades billions of investors have paid 24 to 26X operating cash flow for AMZN outside of bear markets and bubbles.

• 91% statistical probability that this represents the intrinsic value range

Metric Historical Fair Value Multiples (19-Years) 2021 2022 2023 2024

12-Month Forward Fair Value

Operating Cash Flow 25.27 $3,068.16 $4,205.00 $5,492.80 $7,756.37 Free Cash Flow 55.27 $1,162.64 $3,872.64 $6,103.59 $9,336.21 EBITDA 37.10 $5,000.99 NA NA NA Average $2,164.50 $4,031.98 $5,782.11 $8,473.28 $4,166.61 Current Price $2,879.56

Discount To Fair Value

-33.04% 28.58% 50.20% 66.02% 30.89% Upside To Fair Value -24.83% 40.02% 100.80% 194.26% 44.70% 2022 OCF 2023 OCF 2022 Weighted OCF 12-Month Forward OCF 12-Month Average Fair Value Forward P/OCF

Current Forward P/OCF

$166.42 $217.39 $16.72 $170.34 24.5 17.3

AMZN is currently trading at 17.3X forward cash flow, a valuation that no long-term investor in history has ever regretted paying for Amazon.

• as long as they avoided becoming a forced seller for emotional or financial reasons

Analyst Median 12-Month Price Target

Morningstar Fair Value Estimate

$4,105.35 (18.9 OCF) $4,100.00 (24.1 OCF)

Discount To Price Target (Not A Fair Value Estimate)

Discount To Fair Value

29.86% 29.77%

Upside To Price Target

Upside To Fair Value

42.57% 42.38%

Analysts think AMZN will deliver 43% returns in the next 12 months, and that forecast is 100% justified by fundamentals.

S&P 500 Consensus 12-Month Return Forecast

12-Month Forward S&P Bottom-Up Consensus 5301.67 Forward PE Forecast (12 Months From Now)

Forward Overvaluation Forecast (12 Months From Now)

12-Month Consensus Market Return Potential 19.6% 21.41 27.3% 12-Month Historical Margin-of-Error Consensus Market Return Potential 18.0% Historical Margin Of Error 1.60%

(Source: DK S&P 500 Valuation And Total Return Potential Tool)

It's also more than double what analysts expect from the S&P 500 in the next 12 months.

• except for that Amazon is highly undervalued and would still be undervalued after a 43% rally due to 31% consensus growth in 2023
• while the S&P 500 would have to become significantly more overvalued than it is today
• in the face of 7 expected Fed rate hikes
• not a high probability scenario IMHO

Rating Margin Of Safety For Medium-Risk 13/13 Ultra SWAN Quality Companies 2022 Price 2023 Price

12-Month Forward Fair Value

Potentially Reasonable Buy 0% $4,031.98 $5,782.11 $4,166.61 Potentially Good Buy 5% $3,830.38 $5,493.00 $3,958.28 Potentially Strong Buy 15% $3,427.19 $4,914.79 $3,541.62 Potentially Very Strong Buy 25% $2,872.79 $4,336.58 $3,124.96 Potentially Ultra-Value Buy 35% $2,620.79 $3,758.37 $2,708.29 Currently $2,879.56 28.58% 50.20% 30.89%

Upside To Fair Value (Not Including Dividends)

40.02% 100.80% 44.70%

For anyone comfortable with its risk profile AMZN is a potentially very strong buy and here's why.

Total Return Potential That Will Knock Your Socks Off

For context, here's the return potential of the 18% overvalued S&P 500.

Year EPS Consensus YOY Growth Forward PE Blended PE Overvaluation (Forward PE)

Overvaluation (Blended PE)

2021 $203.82 48.69% 23.5 23.1 37% 31% 2022 $222.51 9.17% 19.9 21.7 16% 23% 2023 $245.41 10.29% 18.1 19.0 5% 8% 2024 $274.74 11.95% 16.1 17.1 -6% -3% 12-Month forward EPS 12-Month Forward PE Historical Overvaluation PEG 25-Year Average PEG S&P 500 Dividend Yield

25-Year Average Dividend Yield

$223.57 19.823 17.78% 2.33 3.62 1.45% 2.01%

(Source: DK S&P 500 Valuation And Total Return Tool) updated weekly

Stocks have already priced in almost all of the 100% EPS growth from 2020 through 2024 and is trading at 21.1X forward earnings.

• 16.8 is the 25-year average

S&P 500 2023 Consensus Total Return Potential

Analysts expect the S&P 500 to deliver about -8% total returns over the next two years.

Year Upside Potential By End of That Year Consensus CAGR Return Potential By End of That Year Probability-Weighted Return (Annualized)

Inflation And Risk-Adjusted Expected Returns

2027 35.17% 6.21% 4.66% 1.93%

(Source: DK S&P 500 Valuation And Total Return Tool) updated weekly

Adjusted for inflation, the risk-expected returns of the S&P 500 are about 2% for the next five years.

• S&P's historical inflation-adjusted returns are 6% to 7% CAGR

But here's what investors buying AMZN today can reasonably expect (growing 21% to 41% and 24 to 26X cashflow range).

• 5-year consensus return potential range: 25% to 49% CAGR

AMZN 2023 Consensus Total Return Potential

According to analysts, AMZN could deliver Joel Greenblatt like 40% annual return for the next two years.

AMZN 2027 Consensus Total Return Potential

• if AMZN grows as expected and returns to historical mid-range fair value
• then 359% total returns or 29% CAGR
• about 10X more than the S&P 500 consensus

Just how amazing a potential investment is Amazon?

AMZN Investment Decision Score

Amazon is as close to a perfect hyper-growth blue-chip investment as exists in today's overvalued market.

In fact, it offers 22% risk-adjusted expected returns over the next five years, about 5X more than the S&P 500.

Risk Profile: Why Amazon Isn't Right For Everyone

There are no risk-free companies and no company is right for everyone. You have to be comfortable with the fundamental risk profile.

AMZN's Risk Profile Summary

• inherent cyclicality of retail with the economy
• disruption risk (nearly 1,000 major competitors globally) including MSFT FB, and GOOG in its most important businesses
• political/regulatory risk - anti-trust risk domestically and globally
• global expansion risk (not as easy to disrupt foreign markets with entrenched giants)
• new market penetration risk: healthcare especially is a very highly regulated and challenging industry to disrupt
• M&A execution risk
• labor retention risk (tightest job market in over 50 years and finance is a high paying industry) -
• cybersecurity risk: hackers and ransomware
• currency risk: almost 40% of sales are from outside the US

How do we quantify, monitor, and track such a complex risk profile? By doing what big institutions do.

Material Financial ESG Risk Analysis: How Large Institutions Measure Total Risk

Here is a special report that outlines the most important aspects of understanding long-term ESG financial risks for your investments.

• ESG is NOT "political or personal ethics based investing"
• it's total long-term risk management analysis

"'...ESG is just normal risk by another name.' Simon MacMahon, head of ESG and corporate governance research, Sustainalytics" - Morningstar

"ESG factors are taken into consideration, alongside all other credit factors, when we consider they are relevant to and have or may have a material influence on creditworthiness." - S&P

ESG is a measure of risk, not of ethics, political correctness, or personal opinion.

S&P, Fitch, Moody's, DBRS (Canadian rating agency), AMBest (insurance rating agency), R&I Credit Rating (Japanese rating agency), and the Japan Credit Rating Agency have been using ESG models in their credit ratings for decades.

• credit and risk management ratings make up 41% of the DK safety and quality model
• dividend/balance sheet/risk ratings make up 82% of the DK safety and quality model

Dividend Aristocrats: 67th Industry Percentile On Risk Management (Above-Average, Medium Risk)

AMZN Long-Term Risk Management Consensus Rating Agency Industry Percentile

Rating Agency Classification

MSCI 37 Metric Model 55.0% BBB Average Morningstar/Sustainalytics 20 Metric Model 1.9%

30.0/100 High-Risk

Reuters'/Refinitiv 500+ Metric Model 99.1% Excellent S&P 1,000+ Metric Model 25.0%

Poor (Stable Trend)

Just Capital 19 Metric Model 84.91% Excellent Consensus 53.2% Average FactSet Qualitative Assessment Below Average Stable Trend

(Sources: MSCI, Morningstar, Reuters', JustCapital, S&P, FactSet Research)

AMZN's Long-Term Risk Management Is The 342nd Best In The Master List (32nd Percentile)

• green = potentially good buy or better
• blue = potentially reasonable buy
• yellow = hold
• red = potential trim/sell

AMZN's risk-management consensus is in the bottom 32% of the world's highest quality companies and similar to that of such other companies as

• Tyson Foods (TSN)
• Union Pacific (UNP)
• Broadcom (AVGO)
• Caterpillar (CAT) - dividend aristocrat
• Comcast (CMCSA)
• Nordson (NDSN) - dividend king
• Bank of America (BAC)
• Tesla (TSLA)

The bottom line is that all companies have risks, and AMZN is average at managing theirs. How do we know?

How We Monitor AMZN's Risk Profile

• 52 analysts
• 3 credit rating agencies
• 8 total risk rating agencies
• 60 experts who collectively know this business better than anyone other than management
• and the bond market, the "smart money" on Wall Street, providing real-time fundamental risk updates

When the facts change, I change my mind. What do you do sir?" - John Maynard Keynes

There are no sacred cows at iREIT or Dividend Kings. Wherever the fundamentals lead we always follow. That's the essence of disciplined financial science, the math retiring rich and staying rich in retirement.

Bottom Line: Buy Amazon Today And You'll Likely Thank Me Tomorrow

I can't predict whether Amazon will follow the rest of the tech giants in crushing expectations and rewarding investors with a short-term pop.

But what I can tell you is that

• this is one of the highest quality and safest companies on earth
• its growing faster than any other tech giant
• its 30% historically undervalued
• growth in 2022 is expected to be explosive

This all adds up to one clear fact. Amazon is stupid cheap, and the fattest long-term pitch on Wall Street.

Amazon is the ultimate hyper-growth Ultra SWAN and a coiled spring blue-chip set to soar and too cheap to ignore.

If you are interested in achieving Buffett-like returns from a blue-chip bargain hiding in plain sight, then consider Amazon.

If you want to make your own luck on Wall Street, then Amazon is a potentially very strong buy ahead of earnings.

If you want to stop praying for a "retirement miracle" then Amazon could be the answer to your prayers.

Because the stars have aligned for long-term Amazon investors and this Ultra SWAN offers an unbeatable combination of quality, safety, value, and hyper-growth.

After conducting a thorough examination of its fundamentals, the verdict is clear.

Buy Amazon today, and you'll likely thank me tomorrow.

In fact, anyone buying Amazon today is likely to feel like a stock market genius in 5+ years.