Why Amazon.com Stock Will Finally Hit $1,000
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Reasons Amazon Stock Will Hit $1,000 in 2017

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Amazon.com, Inc. (AMZN), which recently filed a patent to put a warehouse in the sky, continues to push the envelope on what is possible at the intersection of retail and tech. And AMZN stock, which is now hovering near all-time highs, continues to defy skeptics who insists on using the tired valuation argument when assessing its business model — or what some watchers see as “deficits.”

It will continue to defy even more. Because AMZN stock will tackle the quadruple-digit mark before the year is through.

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Why Amazon.com Stock Will Finally Hit $1,000 | Slide 2 of 4

Amazon Is (Somehow) Still Misunderstood

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Amazon stock closed last Friday at nearly $817, good for roughly 9% year-to-date gains to beat the S&P 500 by a mile. Its 40% returns over the past year and 2,000% gains in the past decade similarly dwarf the index.

Betting against AMZN stock has been and continues to be a foolish game.

Amazon — which last week nodded to President Donald Trump’s huge jobs push by announcing it will create some 100,000 new full-time, full-benefit jobs in the next 18 months, has become an unstoppable force. That, however, hasn’t stopped detractors from predicting its demise.

Why? Because Amazon CEO Jeff Bezos doesn’t operate in the manner conventional wisdom would like? Analysts who clamor for a dividend, massive stock buybacks and rising profit margins have been ignored, and rightfully so. Amazon has no interest in modeling itself after your 1990’s has-beens. Instead, CEO Bezos has focused on building the company’s ecosystem while providing sustainable and predictable revenue growth.

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Amazon’s stock price has surged as a result.

SEE ALSO FROM KIPLINGER: Retail Forecast: Online Sales Surge, In-store Sales Hobble

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The Thought Behind Amazon Go

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While Bezos’ methods — including venturing Amazon into areas that might once seemed unrelated to its core business — are unorthodox, his decisions have paid off handsomely, sending AMZN stock soaring 350% in five years.

The company’s entry into the cloud with Amazon Web Services (AWS) is a strong example. Once just considered a side project, AWS is now the cloud standard currently being chased by Salesforce.com, Inc. (CRM) and Microsoft Corporation (MSFT).

In that regard, Amazon Go — its new grocery store concept — is poised to do the same. I won’t proclaim Amazon Go the “death knell” of physical grocery stores like The Kroger Co. (KR) or Whole Foods Market, Inc. (WFM), but Bezos’ vision of the future grocer — one without checkout lines — shouldn’t be ignored.

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Amazon Go won’t need workers at the checkout lane or security guards at the door. Nor will it need grocers to determine which melons belong in your cart. Its lack of personnel would mean lower overhead costs. So this radical new concept would not only grow Amazon Prime’s membership, but it could also boost AMZN’s profit margins.

That’s what excited Wall Street about AWS.

Essentially, with Amazon Go, Bezos would achieve things traditional brick-and-mortar stores want to do but probably can’t now under Trump’s administration. The company’s gross margins will expand without cutting costs or outsourcing manufacturing to cheaper venues like China or Mexico.

At the same time, Bezos’ investments to build these stores, in addition to Amazon’s brick-and-mortar book stores, will fulfill a promise to create new job  in the U.S. — notably, at a time when retailers such as Macy’s Inc (M) are shutting stores and letting go of workers.

SEE ALSO FROM INVESTORPLACE: 3 Reasons Amazon.com Stock Is About to Catch Fire

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Bottom Line for AMZN Stock

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If you factor in initiatives such as drone deliveries, long-haul freight deliveries, its fleet of airplanes and a host of other endeavors, Amazon stock has oodles of tailwinds.

For fiscal 2017, Amazon is expected to earn $8.84 per share on revenue of $167.84 billion, marking year-over-year increases of 85% and 22.5%, respectively. I expect both figures to beat consensus and for Amazon, which reports Q4 results later this month, to raise full-year 2017 guidance.

Accordingly, AMZN stock should deliver roughly 25% gains … which would put it over $1,000 in 2017.

This article is by Richard Saintvilus of InvestorPlace. As of this writing, he held none of the aforementioned securities.

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