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Asset Watch

Is Amazon a best-buy for the holidays?

 

Tuesday, November 29, 2022

While the holiday season has investors in the Christmas spirit, Amazon has not been on their wish list. Moreover, with Best Buy and Amazon among the largest e-commerce consumer electronics retailers in the U.S., the former’s recent outperformance highlights the depressed sentiment confronting Big Tech.
However, as the pair often follows in each other’s footsteps, could Amazon soon join the celebration?
On Nov. 26, Adobe reported U.S. online sales had hit a record $9.12 billion on Black Friday and a record $5.29 billion on Thanksgiving. Electronics orders also surged by 221% compared to an average day in October, while 48% of online sales were made from smartphones, up from 44% last year. Adobe estimates that consumers will spend another $11.2 billion on Cyber Monday, an increase of 5.1% versus 2021.

Although Amazon ended the Nov. 25 session up by 8.8% from its 2022 low, Best Buy is up by 33.6% from its 2022 low. Therefore, if a strong holiday showing culminates with some bullish mean reversion, Amazon could outperform in the weeks ahead.

The only caveat is the S&P 500 is still flirting with its 200-day moving average, and the metric is less than 1% above the Nov. 25 close. And since information technology and consumer discretionary are among the S&P 500’s largest sectors, Big Tech may decide whether the rally continues.

As a result, should you bet on a revival, or will Amazon continue to disappoint the bulls?


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