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Despite the stock of Amazon.com (NASDAQ:AMZN) having a lukewarm 2021, next year could see the shares of the e-commerce giant come back to new heights. The company has invested hard in capacity and technology infrastructure, which is bound to set it apart from retail giants like Walmart Inc (NYSE:WMT).
Driven by a $38 billion investment to improve capacity and infrastructure and by the skyrocketing growth of e-commerce during the pandemic, Amazon stock is in for a successful 2022—to date, the stock offered a 4.3% return.
However, according to The Motley Fool, Amazon will pick up, given its dominant position in the e-commerce and cloud computing businesses. Further, the company’s heavy investment in advertising is bound to play a key role.
Amazon had a torrid year, as the online juggernaut reported 15% revenue growth in the third quarter. The company is expected to report top-line growth between 4% and 12% to close out the year. Those numbers are not what investors are used to seeing from the e-commerce leader.
Still, what is relevant regarding Amazon stock is where the company is heading in the near future amid a “strong cash position.” and how this could be used to leverage its competitive advantage against its competitors.
Supply is—and is bound to be for the next months—the most critical aspect in Q4. Retailers like Walmart Inc and Target Corporation (NYSE:TGT) have weathered the storm to a point where product stock is higher than the same period last year.
Costco (NASDAQ:COST) might be in the best competitive position among these leading retailers. It reported comp sales growth of 15% in the most recent quarter, faster than Target and Walmart, and on par with Amazon’s growth rate. Costco’s stock price is up almost 50% year to date.
However, what sets Amazon apart from its competitors is cash. All the money splashed on greater capacities, and more supply chain control is what is set to make the difference ahead of 2022, as Amazon is able to afford any extra measure to bypass logistics issues.
Amazon ended the third quarter with $79 billion of cash and short-term investments sitting in the bank despite those investments. It generated $26 billion of free cash flow in 2020.
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