<p>Amazon (NASDAQ: AMZN) continues to have strong, positive catalysts as the coronavirus outbreak continues. In addition, the Amazon share seems to have built up a lot of momentum in recent days. However, investors should keep in mind some of the threats facing the company.
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As I noted in a previous column, common sense along with statements from two of China’s largest e-commerce companies, Alibaba (NYSE: BABA) and China’s JD.com (NASDAQ: JD), suggest that Amazon’s e-commerce business will be strengthened by the coronavirus outbreak.
I also pointed out that analysts were “optimistic about the ability of large cloud companies, including Amazon and Microsoft (NASDAQ: MSFT), to continue to grow during a recession.”
I continue to believe that the inability of many consumers to shop in brick stores, coupled with the likely resilience of Amazon’s cloud business to economic downturns, makes Amazon one of the better tech stocks to buy.
Furthermore, the product shortage experienced by some brick stores should also help Amazon’s e-commerce business, as Brent Thill, an analyst at research firm Jefferies, pointed out in a new comment to investors.
The Amazon stock is gaining momentum
Amazon shares have risen an impressive 16% since March 12. According to a Marketwatch columnist, the stock chart shows that “professional investors such as fund managers and institutions” have recently bought the shares.
Finally, on March 25, Investopedia identified Amazon as one of five discretionary consumer stocks “with the most momentum” and noted hedge fund manager David Tepper reported that he had “grabbed” the shares.
But Thill recently identified several threats to Amazon, including higher labor costs, fewer items per order and the same transition to cheaper items quoted by Alibaba and China’s JD.com.
In addition, workers at ten of Amazon’s stock on March 25 tested positive for coronavirus. If that trend accelerates, the company may have difficulty meeting demand because it may lack enough workers to gather its orders.
Furthermore, although I do not expect that the authorities close a large number of company stock, such a scenario might occur.
The Roku share looks like a better choice
For investors looking for a fast-growing, consumer-oriented technology company that can thrive despite the outbreak, Roku (NASDAQ: ROKU) looks like a much better choice than Amazon right now.
As I have written before, Roko’s viewers will climb enormously during the coronavirus outbreak, and companies that do well during the outbreak, such as Kroger (NYSE: KR) and Walmart (NYSE: WMT), will likely look to advertise on Roku’s platform.
Unlike Amazon, labor issues should not be cut into Roko’s end results or threaten its operations; Roko’s platform can probably be run by a few people, and its advertising sales team should be able to work from home.
Given all these points, Roku looks like a better, safer choice than Amazon shares in the midst of the coronavirus pandemic.
As of this writing, Larry Ramer owned shares in Roku shares. Larry Ramer has been researching and writing articles about US stocks for 13 years. He has been employed by The Fly and Israel’s largest business magazine, Globes. Larry started writing columns for InvestorPlace 2015. Among his very successful, conflicting choices have been GE, Sun Warehouse and Snap. You can reach him on StockTwits at @larryramer.