Amazon.com, Inc. (AMZN) continues to gain market share from traditional brick-and-mortar stores, and is a world-class provider of many product categories that appeal to low- to middle-income consumers looking to stretch their budgets, says R.J. Hottovy, Global Director of Consumer Equity Research and Senior Restaurant and Retail Analyst at Morningstar.
“Amazon is slightly undervalued. We think that they continue to be market share gainers from traditional bricks and mortar, and even though profitability is still a question mark there, we do think the company has a strong model and will have good operating margins over the next several years,” Hottovy said.
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Hottovy is seeing a massive channel shift in terms of where consumers are spending, and Amazon is an attractive retailer to those looking to stretch their household income, Hottovy says.
“Amazon‘s ability to be the world-class provider in many cases and in many product categories makes them an attractive player in this environment where you do have that lower- and middle- income consumer looking to stretch their household budget any way they can,” Hottovy said. “I think those are the kind of companies that consumers flock to in order to stretch their household budgets. So I think that those names become particularly interesting if we do start to see things continuing to get tighter for the average consumer.”
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