Making the case to buy Amazon more compelling, the stock is cheaper than in years. Amazon’s price-to-sales ratio of 2.3 and price-to-earnings multiple of 52 is near their lows of the past five years. The company has been caught up in the broad market sell-off, and its stock is down considerably off its highs.
Pros And Cons Of Investing In Amazon Stock
- The pros or merits of investing in Amazon include its pricing power, a more favorable revenue mix that leads to improved profitability, and expectations of lower capital expenditures going forward.
- The cons or negatives of buying AMZN shares include stiff competition in the e-commerce segment, and the difficulty of achieving success in new markets and new growth areas.
- My Hold rating for Amazon stays unchanged; there are both pros and cons to investing in AMZN and its valuations are not sufficiently attractive to support a Buy rating.
How to Buy Amazon Stock (AMZN)
Decided to add this retail giant to your portfolio? Here’s what you need to know before buying Amazon stock.
Once you have a brokerage account and you’ve decided how much to invest, it’s time to buy Amazon stock.
A stock’s price is determined by its bid-ask spread — essentially, the gap between the price buyers are willing pay and the price sellers are willing to accept. The bid-ask spread changes throughout each trading day, but you shouldn’t get too hung up on getting the lowest price to the penny — more on that below.
When you’re ready to buy the stock, you’ll do so through your online broker’s website or trading platform. You’ll be asked to choose an order type, which determines when and how your order to buy Amazon stock is executed.
Most brokers offer a range of order types , but you’ll generally be fine if you stick to two choices: a market order and a limit order.
- A market order executes ASAP. It is generally a good choice for buy-and-hold investors. The price you pay for the stock may vary slightly from the price you see when placing your order, because a market order prioritizes time: It is executed as quickly as possible at the best available price.
- A limit order is a good choice for investors who prioritize price over speed: Your order will be placed only if the stock price hits the level you’ve set. Limit orders are helpful during wild market swings, but the risk is that your order may not get executed in full or at all.