Amazon.com Inc. (NASDAQ:AMZN) announced plans to open a new fulfillment center in West Jordan, Utah, in order to meet the growing demand in the online shopping space.
The company has been spending heavily on new fulfillment centers over the past few years. Fulfillment centers are giant warehouses that help online retailers store and ship products, as well as handle returns quickly. These are important for providing the level of service that customers have started expecting from Amazon.
According to Amazon, the new facility will span more than 1 million square foot. The employees will pick, pack and ship large customer items such as sports equipment, patio furniture, fishing rods, pet food, kayaks, bicycles, along with larger household goods at the facility.
The facility is expected to create more than 800 full-time jobs that will offer wages starting at $15 an hour, including other comprehensive benefits. A few of these benefits include full medical, vision and dental insurance. In addition, maternal and parental paid leave of up to 20 weeks will be given to its employees, among others.
The online retailer has been strengthening presence in Utah over the past two years. To date, Amazon has created more than 2000 jobs in the state and continues to hire manpower to meet the growing customer demand. It has been increasingly pouring cash to build and modernize fulfillment centers, mainly to cut shipping costs and speed up delivery.
Amazon.com, Inc. Price and Consensus
Our Take
Amazon has been strengthening presence all over the world.
In our view, the company must maintain its U.S. market share while expanding globally, in order to retain the leading position. To this end, it needs to invest more in fulfillment, technology and content, especially in international markets with less penetration and higher growth rates.
Although increased expenses may hurt Amazon’s bottom line in the near term, we believe that this is necessary to maintain its dominance in this highly competitive market.
Zacks Rank & Stocks to Consider
Amazon currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader technology sector include Alphabet Inc. (NASDAQ:GOOGL) , Itron, Inc. (NASDAQ:ITRI) and Teradyne, Inc. (NASDAQ:TER) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Long-term earnings growth for Alphabet, Itron and Teradyne is currently projected at 17.5%, 25% and 11.4%, respectively.
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