This Retail Giant's Stock Is an Absolute Bargain. It's Cheaper Than Walmart and Costco.

Core Insights - Retail sales in 2024 remained strong, with Walmart and Costco achieving significant market share gains, driven by improvements in e-commerce and in-store sales [1][5] - Walmart and Costco's stock prices have surged, trading 81% and 98% higher than at the start of 2023, outperforming the S&P 500 [2] - Amazon, while growing at a slower rate in online sales, continues to dominate the e-commerce market and has improved profitability significantly [6][7] Company Performance - Walmart and Costco both reported over 20% year-over-year growth in U.S. e-commerce sales, contributing to strong same-store sales growth [5] - Amazon's North America segment achieved an operating margin of 6.4% in 2024, up from 4.2% in 2023, while Walmart and Costco reported margins of 5.2% and 3.7% respectively [7][8] - Amazon's international segment turned from an operating loss to $3.8 billion in operating income last year, showcasing improved profitability [8] Competitive Advantages - Amazon's logistics overhaul has reduced costs and improved delivery speed, enhancing its competitive edge [9] - The growth of Amazon's retail media advertising business, which saw an 18$17.3 billion, contributes to its high-margin revenue [10] - Amazon Web Services (AWS) generated over $100 billion in revenue with a 37% operating margin, significantly boosting overall profitability [12] Valuation and Growth Potential - Amazon's stock is currently priced at about 30 times forward earnings, making it cheaper than Walmart at 32 times and Costco at 50 times [15] - Amazon's earnings per share are projected to grow by 15% this year, compared to 9% for Costco and 5% for Walmart, indicating stronger growth potential [16] - Analysts expect Amazon's earnings growth to accelerate to 20% by 2026, driven by investments in AWS [17]