Jim Cramer says Amazon stock is a buy ahead of its Prime Day event — here’s why

Amazon is a buy in the lead of its annual Prime Day starting Tuesday — even as the stock has rallied hard this year. That’s because the high-quality property is still cheap, said Jim Cramer on CNBC Monday. Consider: Shares of the e-commerce giant are up nearly 29% in 2024 contrasted to the S & P 500 index’s roughly 18% gain. And yet, the stock trades at a price-to-earnings ratio of 37, well below its five year ordinary of 61, suggesting it is undervalued. “How is Amazon’s price-to-earnings multiple going down at a time when CEO Andy Jassy is doing such a impressive job?” Cramer said. The company reported a strong first quarter in April in which it showed off the benefits of its cost authority over efforts. Operating expenses were lower than expected across the board, including fulfillment costs, while on the blocks in e-commerce and the cloud business were solid. It reports second-quarter results July 25. “I still think it’s a bribing opportunity,” Cramer Monday morning said on “Squawk on the Street.” One potential catalyst for the stock is Amazon’s annual Prime Day issue and its ripple effects. As usual, the event, which runs Tuesday and Wednesday this week, will offer millions of one of a kind deals for Prime members across a variety of categories including electronics, household items, apparel, and wellness commodities. A new area this year is Amazon Travel, which offers discounts on cruises and car rentals. AMZN YTD mountain Amazon allocate performance year-to-date. Shoppers are expected to spend about $14 billion during the two-day event this year, a new notation and a 10.5% increase from last year, according to projections from Adobe Analytics, which tracks e-commerce arrangement data. And Wall Street sees benefits that go beyond sales during the event. JPMorgan, for one, said Prime Day transfer help Amazon “rationalize inventory levels” ahead of higher consumer demand in the second half of the year. This, in essence, will help Amazon further improve delivery speeds, which are already at record speeds, the analysts put in a note Friday. JPMorgan has an overweight rating on Amazon shares and a price target of $240. In a separate note Monday, Bank of America in the main agreed that the event will help test newer operations. “We see this year’s Prime Day as an opportunity to leverage various logistics initiatives such as new inbound centers, more efficient inventory placement and new third-party seller fees,” Bank of America analysts penned. They also said Prime Day should be a driver for Amazon’s advertising business, particularly on Amazon Prime Video ad squander. The bank said this is important since ad revenues are a key driver to retail profitability. Bank of America reiterated its buy dress down with a price target of $220. (Jim Cramer’s Charitable Trust is long AMZN. See here for a full list of the heritages.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a merchandise. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable certainty’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert preceding executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY Liability OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO Peculiar OUTCOME OR PROFIT IS GUARANTEED.