It’s not often a trillion dollar company experiences such a sharp share price move. Does it present an opportunity for me to buy one of the world’s largest companies at a discount? Or has this FAANG stock lost its sparkle?

Amazon share price drop

To answer that, I’d need to look a little closer at what the company said. I suspect the Amazon share price dropped so sharply due to the guidance given for the upcoming holiday season.

Amazon said it expects net sales to be between $140bn and $148bn in the fourth quarter. But analysts were expecting the forecast to be over $155bn.

CEO Andy Jassy pointed to the macroeconomic environment. Higher inflation and soaring interest rates are squeezing customer finances. And that is directly impacting Amazon’s sales. The stronger dollar this year is also having a negative impact on its sales.

Looking ahead

That said, the stock market tries to look forward and anticipate what sales and profits are likely to be in the months and years ahead. So could the situation improve and help the Amazon share price to bounce back higher in the coming year?

Much seems to be outside of Amazon’s control. Any sign of resolve in the conflict in Ukraine could result in lower energy costs. Any signs of falling inflation could persuade the US Federal Reserve to pivot on their current approach of raising interest rates.

All these factors could improve the macroeconomic environment and lead to higher sales for Amazon.

I reckon all these things will happen eventually and the situation will improve. But it might take some time. That’s why I’m in no hurry to buy Amazon shares right now.

Long-term investing

That said, I favour long-term investing. Looking several years ahead, the current challenges may look like temporary blips in Amazon’s long-term journey.

Despite the external economic factors currently hurting the company, there are levers that it can pull. It’s already taking measures to tighten its belt and reduce costs. That includes pausing hiring in certain businesses and winding down some of its less-used services.

At the same time, it will continue to focus on providing the best customer experience. This has been key factor in Amazon’s ethos since Jeff Bezos started it as an online bookstore a few decades ago. By putting customers first, it believes the Amazon share price will reward shareholders in the long term.

That’s where I agree. In addition to being the world’s largest online retailer, Amazon also owns the world’s largest cloud platform, Amazon Web Services (AWS). I reckon it’s well-placed to benefit from a continuing global shift towards cloud computing over the coming decade.

Overall, I think the long-term future for Amazon looks bright. That said, near-term headwinds could lead to a volatile share price over the coming months. It’s certainly an investment I’ll be keeping an eye on.

Checking the historical performance

Over the past year, the Amazon share price is actually down 31.8%. Almost 12% of this fall has come in just the last month. So my £1,000 would be worth only £682. If I’d parked my money here a year ago, I wouldn’t be best pleased. However, it’s one thing to have an unrealised loss in isolation. But I also need to consider how other investments over this time frame would have performed.

A good benchmark is looking at the Nasdaq 100. Over the same period, it has lost 26.7%, hovering around 11,000 points at the moment. From this, I can see that Amazon has underperformed the index, but the performance is similar in that both the stock and the overall market have fallen severely.

Another comparison is to look at competitors. This isn’t perfect as Amazon is fairly unique and has a dominant position in the e-commerce space. However, I’d say Alibaba is similar it. Alibaba shares are down 55% over the last year, much worse than the American giant.

Better odds for the next year

When I broaden my timeframe to the past five years, we haven’t seen such a prolonged drawdown in the share price as we have now. I can interpret this in a couple of different ways. I could argue that this means something fundamentally different is going on that could spark a longer-term fall in years to come. Another view is that this is a multi-year opportunity for me to buy with the aim of the stock eventually rallying to previous highs.

I feel the latter is the most likely outcome. For a start, Amazon has a strong grip on the marketplace when it comes to e-commerce. However, it has been working hard to generate diversified profits, such as from Amazon Web Services and Prime Video. Going forward, this broader range of revenue streams should allow it to smooth out underperformance from one specific area.

Further, I think that part of the drop in recent months is simply to do with broader negative market sentiment. Rising interest rates in the US are fuelling comments that the country will go into a recession next year. Clearly, this would be a negative for the stock market. When sentiment turns sour, it’s typically the growth stocks (particularly tech names) that suffer the most.

Don’t get me wrong, the US could easily slide into an economic downturn. But my point here is that it’s not specifically Amazon that’s performing badly. When we hit the recovery stage of the economic cycle, I’d expect the share price to go higher.

On that basis, even with a disappointing last year, I’m not ruling out investing £1,000 in Amazon shares in coming months for long-term gains.

The trouble with such small-cap companies is that they’re less financially robust than most larger UK shares. So when times get tough, the casualty rate here is higher than usual.

There can be a huge advantage in buying small-caps like penny stocks, however. They often tend to be young companies that have the potential to grow earnings much faster than established businesses. This means that early-stage investors have a chance to make market-beating returns.

The mighty Amazon

Amazon (NASDAQ: AMZN) is often used to illustrate how a small-cap company can over time deliver spectacular shareholder profits.

At the time of Amazon’s initial public offering (IPO) in 1997 its market capitalisation stood at just $438m. Meanwhile its shares traded at just $18 each.

The rise of e-commerce in the following 25 years has subsequently made Amazon one of the world’s most valuable companies. Today it’s a $1.37trn Nasdaq behemoth whose shares trade at around $135. And its trading results are used to gauge the underlying strength of the economy.

Buying the company’s shares back in the late 90s was a far riskier proposition than today. But many investors who foresaw the growth of online shopping and bought the retailer have made a fortune.

The chart below shows that someone who invested $1,000 in Amazon back in 1997 would have made $2.34m as of mid-2021!

A hot UK share

Investors don’t need to go to the US to find high-growth companies to invest in, of course. The London stock market is also packed with exciting small-cap companies to buy.

Take penny stock Savannah Resources.

On the one hand, this early-stage miner is packed with risk. It doesn’t have the mighty balance sheet strength of, say, a FTSE 100 mega miner like Rio Tinto. And it’s still waiting to receive environmental approval to start producing lithium at its Barroso project in Portugal.

But Savannah Resources also has considerable investing potential. Barroso is the largest lithium mine in Western Europe. And demand for the metal — a critical material in batteries — is tipped to explode as electric vehicle sales take off.

Another top penny stock

Let’s look at Corero Network Security too. It provides protection against Distributed Denial-of-Service (or DDoS) cyber attacks.

Sure, the business faces huge competition from industry giants like Microsoft and McAfee, to name just a couple. However, the rate at which cyber crime is growing still provides the business with exceptional profits possibilities. Order intake at Corero grew 22% in the six months to June.

Only time will tell if these penny stocks will generate stunning long-term returns like Amazon has. But despite the undeniable risks, those who are brave enough to invest in early-stage companies like these can get extremely wealthy by taking the plunge.

The business

Amazon.com divides its operations into two parts. The first part is the online retail and the second is the web services business (AWS).

AWS is the organisation’s cash engine, which accounts for around 14% of the overall company’s revenues. It’s easy to see why investors are attracted to AWS.

The web services business has operating margins of around 35%, which is impressive. That compares favourably to Apple (30%), Alphabet (30%), and ASML Holding (30%).

AWS is also growing rapidly. Last year, the business achieved 37% growth in revenue and 43% growth in earnings.

The remaining 86% of Amazon’s revenue comes from its retail operations. Operating margins in this part of the business are much lower, typically around 5%.

Low margins can make this part of the business seem unattractive. But I think that focusing on the margins here is a mistake.

In my view, the business is comparable to CostCo, which Charlie Munger views as a terrific company.

CostCo has low margins, but it makes money by customers paying a subscription to shop there. It does this by having a reputation for providing the lowest prices anywhere.

Amazon doesn’t have the same reputation when it comes to price. But I think it secures its reputation by having the fastest delivery times.

Just as customers know that nobody will have lower prices than CostCo, they know that nobody will get their goods to them faster than Amazon. In my view, this is a hugely under-appreciated feature of Amazon’s retail operations.

I think that the retail part of Amazon’s operations has a hugely valuable intangible asset.

Valuation

Amazon shares have fallen by around 33% since the start of the year. At current prices, I’m buying the stock for my portfolio. 

At first sight, the Amazon share price looks expensive, trading at a price-to-earnings (P/E) ratio of 55. But I think that the P/E ratio is misleading here.

An impairment charge in the last quarter has left the company’s earnings per share lower than they might otherwise have been. That’s unlikely to be a recurring issue, but it pushes up the stock’s P/E ratio.

In 2021, the company generated just over $33bn in operating income. That implies a P/E ratio of around 35.

Amazon shares look attractively priced to me. The risk is that a recession will stall the company’s growth, but I don’t anticipate this being a long-term issue.

The biggest risk to the company that I can see is the possibility of an economic recession brought on by inflation. While this might be a short-term problem, I think that Amazon’s business strength will prevail over time.

I think that Amazon shares can be a great investment for my portfolio. The strength of its business, combined with its potential for strong returns, gives me confidence in buying the stock right now.

[Just beginning your investing journey? Check out our guide on how to start investing in the UK.]

Begbies Traynor Group 

What it does: Begbies Traynor provides financial services for companies in distress. The firm is a specialist in corporate insolvency. 

By Royston Wild. The outlook for the UK economy is getting gloomier as inflation accelerates. National output shrank in March, latest data shows, and recessionary risks are rising. It means that counter-cyclical share Begbies Traynor Group (LSE: BEG) could be a top stock for me to buy this June. 

A mix of economic deterioration and the withdrawal of government furlough support is driving corporate insolvencies through the roof. The cash crunch facing British business looks set to intensify, too, as lending conditions get tougher.  

A study from the Federation of Small Businesses shows that banks are “pulling up the drawbridge” to firms seeking capital. Indeed, just 19% of companies surveyed described the availability of credit as “good” in quarter one. This was the lowest figure since 2016. 

In this climate I think demand for Begbies Traynor’s financial services could soar. City analysts think the stock’s earnings will rise 10% in the 12 months to April 2023. I believe this estimate could be revised upwards as the fiscal year progresses. 

Royston Wild does not own shares in Begbies Traynor Group. 

XP Power

What it does: XP Power is a designer and manufacturer of power converters for the global electronics industry.

By Zaven Boyrazian. With Covid-19 creating plenty of disruptions for manufacturing businesses like XP Power (LSE:XPP), it’s not surprising to see the stock suffer by nearly 40% over the last 12 months. However, these issues are ultimately short term. Meanwhile, demand for the group’s products continues to climb, especially from semiconductor manufacturing companies.

Looking at the latest quarterly results, revenue grew by a meagre 8%, courtesy of the aforementioned disruptions. But the order book stands at a record £260m. And with a new manufacturing facility now under construction, the firm’s order capacity is set to expand considerably over the next few years.

In my opinion, this places XP Power in a favourable position to secure long-term growth. And that’s why, alongside the accolade of being my preferred stock for June, the recent tumble in share price looks like a great buying opportunity for my portfolio today.

Zaven Boyrazian does not own shares in XP Power.

Aviva

What it does: Aviva is a UK company offering a range of insurance and wealth management services

By Alan Oscroft: Aviva (LSE:AV) has been restructuring itself for several years, disposing of non-core businesses and cutting costs. As a result of that, it has had the cash to return a total of £4.75bn to shareholders, directly and via share buyback. The company now plans to pay progressive dividends yielding better than 7% this year and next.

Aviva is not out of the woods yet, after recording an earnings fall in 2021. The financial sector is also facing an uncertain outlook in today’s economic climate. But Q1 figures in May showed solid progress.

On balance, I think Aviva has all but turned the corner. But I don’t think the share price has caught up yet. Now Aviva has all but completed its capital return, investors can focus on future of the restructured company.

I’m hoping June could be the start of a renewed bull run. I’m holding, and might even buy more.

Alan Oscroft owns shares in Aviva.

Tritax Big Box REIT

What it does: Tritax Big Box REIT is a real estate investment trust that owns a portfolio of logistics warehouses.

By Edward Sheldon, CFA. Tritax Big Box REIT (LSE: BBOX) shares pulled back in late April (after e-commerce giant Amazon announced that it has a surplus of warehouse space) and I believe this has created a buying opportunity.

One reason I’m bullish here is that in the company’s recent first-quarter results, management advised that demand for new logistics space remains “very strong” and that the group is well-placed to capitalise on the high level of demand through its development pipeline. It added that it is handling inflation through active management of open market rent reviews, along with inflation-linked leases.

Another reason is that since the share price has fallen, eight company insiders, including the Chairman, have stepped up to buy stock. This indicates that those within the company expect the share price to rebound.

Now, BBOX does have a relatively high valuation. This adds some risk. If future results are disappointing, the stock could underperform.

Overall, however, I believe the long-term risk/reward proposition here is attractive enough to name the stock as my favourite for June.

Edward Sheldon owns shares in Tritax Big Box REIT and Amazon

Games Workshop

What it does: Games Workshop designs and manufactures miniatures and games. It sells these through various retail channels.

By Stephen Wright. Games Workshop (LSE: GAW) is a stock that I’d very much like to own in my portfolio. The company has a loyal and committed customer base, with good intellectual property rights protecting its business. It also has a balance sheet that instils confidence in me, having more cash than debt.

The company is in an interesting place at the moment. I think that high inflation and rising interest rates are likely to put pressure on businesses in this sector. But Games Workshop’s unique product should, in my view, see them through.

At the stock level, I’ll be looking to exploit any weakness in June to start building out a position. I think it’s important to be disciplined about overpaying, but I think there could be an opportunity here to acquire a great business at a reasonable price.

Stephen Wright does not own shares in Games Workshop

Abrdn

What it does: Abrdn is a global investment management company, managing a wide range of assets for its clients. 

By Michelle Freeman. It may seem counter-intuitive to pick Abrdn (LSE:ABDN) as my top stock for June. After all, its core business model is its fee-based investment offerings, opposite to the Motley Fool line of thinking. 

But you see, it’s not difficult to make money in a long bull market. However, a good strategy is priceless when it comes to navigating choppier investment waters. That’s why I think the recent run of doom and gloom news on investment markets will see a lot of retail investors willing to pay a little more for investment advice. 

With the share price remaining down over 25% year-to-date, I see plenty of long-term upside potential. That’s backed up by a majority of analysts holding buy targets above today’s price. 

And when you throw in that very tasty +7% dividend yield, it makes it a whole lot easier to stay the course through the ongoing market volatility.

Michelle Freeman does not own shares in Abrdn.

Associated British Foods 

What it does: ABF is the owner of retailer Primark and four food production businesses in grocery, sugar, ingredients and agriculture 

By G A Chester. Associated British Foods (LSE: ABF) is out of favour with the market. Indeed, you have to go back almost a decade to find the share price as low as its current level. 

Primark suffered during the pandemic, but the group remained profitable thanks to its food businesses enjoying strong demand. Primark has since recovered well, and food sales have continued to grow. 

However, like a lot of companies, ABF is now seeing significant inflationary pressures in raw materials, supply chains and energy. These costs will negatively impact the group’s profit margins. Notwithstanding the headwinds, management’s outlook for the year is for “significant progress in adjusted operating profit and adjusted earnings per share.” 

There’s a risk management’s expectations could prove over-optimistic, because the economic backdrop is so uncertain. Nevertheless, with the share price and valuation at multi-year lows, I think I’m looking at a rare opportunity to buy into a high-quality enterprise. 

G A Chester does not own shares in Associated British Foods 

Games Workshop

What it does: Games Workshop designs, manufactures, and sells fantasy miniatures and related products

By Paul Summers. Rather than move into cheaper but inferior value stocks at a time when investor interest in them might be peaking, I think the current market volatility offers me a wonderful opportunity to buy some of the UK’s best growth stocks at knock-down prices. One example is Games Workshop (LSE: GAW). 

As I type, shares are down over 30% year-to-date and almost 45% off their 52-week high. This brings the price-to-earnings ratio down to 18 – mightily attractive considering the high margins and massive returns on capital Games usually posts.

Sure, spending on hobbies will likely be reduced as the cost of living gallops higher. However, I reckon the sheer popularity of its products and loyalty of its customers means business should recover strongly once the clouds have passed. 

So long as I’m prepared for hold for more than a few months, building a position in this stock in June could prove lucrative.

Paul Summers does not own shares in Games Workshop

Associated British Foods

What it does: Associated British Foods is a highly diversified business. It is the owner of a number of leading brands including: Primark, Silver Spoon and Kingsmill. It also produces a number of food ingredients including sugar beet and flour.

By Andrew Mackie. Associated British Foods (LSE:ABF)’s share price is now trading at levels not seen since the stock market crash of March 2020. Here’s why it’s my top stock for June.

However, to my mind, the business is in a lot stronger position than during Covid. Yes, Primark has been forced to raise prices on a number of autumn items due to rising input costs. But all its stores are trading and revenue growth remains strong. Its no-frills brand will likely resonate well amongst increasingly cost-conscious consumers, particularly in the run up to the holiday season.

But ABF is a lot more than just Primark. The business continues to invest heavily in its grocery brands. Twinings, for example, recently enhanced its offering in the lucrative wellbeing teas market.

I am also excited about its agriculture division which produces animal feeds for pig, poultry and dairy. As food security becomes an increasingly important consideration, yield sustainability and environmentally-friendly practices will favour innovative businesses such as ABF.

Andrew Mackie owns shares in Associated British Foods.

JD Sports Fashion

What it does: JD Sports Fashion is a retail chain specialising in sports, fashion and outdoors brands, with a large digital commerce footprint.

By Christopher Ruane. The retailer JD Sports Fashion (LSE: JD) is known for low prices — but lately that has been true for the company’s shares as well as its shoes.

Over the past 12 months the JD Sports share price has tumbled 35%. But I think that fall is overdone and see a buying opportunity for my portfolio. The company expects to report its annual results in June. I reckon that could lead investors to reconsider the share price.

JD has said that headline profits before tax and exceptional items for last year are expected to come in at £940m. It thinks that 2023 will be at least as good, although a worldwide shortage of certain types of footwear is one risk to revenues and profits. With a market capitalisation of £6.2bn, I think the company looks cheap given its strong performance and attractive business outlook, making it my top stock for June.

Christopher Ruane owns shares in JD Sports.

Anglo American

What it does: Anglo American is a mining firm operating across the globe. It mines diamonds and platinum group metals (PGMs), together with copper, iron ore, and nickel.

By Andrew Woods. Anglo American (LSE:AAL) posted bumper pre-tax profits in 2021 of $17.6bn, up from $5.4bn the previous year. The company has recently been benefiting from historically high metal prices. These higher prices have been largely caused by the reopening of economies after the pandemic. Furthermore, the situation in Ukraine has heightened supply concerns and the overall trend of rising metal prices could be here to stay for a while yet.

The firm also recently signed a memorandum of understanding with EDF Renewables. This will develop solutions to make Anglo American’s South Africa operations run on 100% renewable energy. This is part of an effort by the business to make its mining operations more environmentally friendly.

While iron ore production declined for the first three months of 2022, the diversity of Anglo American’s business may continue to allow it to reap the benefits of surging demand for base metals, not to mention rising revenue from growing diamond sales in the US. 

Andrew Woods does not own shares in Anglo American

Computacenter

What it does: Computacenter supplies IT hardware and services to large corporate and public sector organisations.

By Roland Head. FTSE 250 group Computacenter (LSE: CCC) has a long history of steady growth. Sales have doubled to £6.7bn since 2012, while Computacenter’s annual profit has tripled to £185m over the same period.

Demand surged through the pandemic due to work-from-home and ecommerce demand. Although growth has eased in 2022, Computacenter management still expect to report “a year of further progress”. This tells me that another increase in annual profits is expected.

The main risk I can see is that an economic slowdown in 2022/23 could hit demand and cause Computacenter to miss a year or two of growth. However, I think the company’s share price already reflects a cautious view.

Computacenter is highly profitable and ended last year with net cash of £95m. The stock’s forecast price/earnings ratio of 15 times is at the lower end of its historical range. I think the shares look decent value at this level.

Roland Head does not own shares in Computacenter.

Burberry

What it does: Burberry is a British luxury fashion brand that design and distributes ready-to-wear items. These include trench coats, leather goods, footwear, fashion accessories, eyewear, fragrances, and cosmetics.

By John Choong. Having seen a 15% decline this year, the Burberry (LSE:BRBY) share price could be on the verge of a rebound this summer. As a luxury brand, many of Burberry’s goods hedge against inflation. This was evident in its latest earnings results, as its profitability hit an eight-year high. The company makes the bulk of its revenue from China, and it’s been capitalising on the uptake in luxury consumer spending within the region. In fact, the British firm opened a flagship store in Shanghai recently.

Although I expect the next trading update to post bitter numbers as a result of the recent lockdown in Shanghai, I remain optimistic for the FTSE 100 firm’s long-term prospects. I believe that sales figures will rebound along with its share price once restrictions come to an end, and that a sour trading update for Q1 could present a buying opportunity for the stock in June.

John Choong does not own shares in Burberry.

Here are three shares I would consider buying for my ISA at their current prices.

Alphabet

The parent company of Google — Alphabet (NASDAQ: GOOG) — touches billions of lives countless times a day. Its services are wired into many people’s daily routines.

Not only do I think that means it will not disappear any time soon, it makes me hopeful about future growth prospects for the company. Its technology and user understanding, along with the installed customer base, give it commercial advantages a competitor would find difficult to match. That gives Alphabet strong pricing power. Indeed last year, its earnings soared to a record high $76bn.

But over the past year, Alphabet shares have moved up just 1%. I do think there are risks here – when tech companies reach the size of Alphabet they often attract the attention of regulators. That can hurt profits. But the tech powerhouse is a moneymaking machine. I used to own its shares in my ISA and would consider buying them again at the current price.

Amazon

Another share I would consider adding to my Stocks and Shares ISA is digital retail and data giant Amazon (NASDAQ: AMZN). The company’s shares have seen a 28% slide in the past year.

Amazon is a leading tech share, so if sector stocks fall further it would not surprise me to see Amazon among them. But stepping back from the market noise to a long-term perspective, I think the industry leader’s advantages over competitors are set to keep growing.

It has a huge customer base, including over 200m members of its Prime service. It is also an expert both in logistics and data management. Those attributes should help it be solidly profitable in years to come, I reckon.

Growing local competition in a variety of markets could force Amazon into lower profit margins. But the business model is proven and I expect the company to thrive in the coming decade. I would consider adding Amazon to my Stocks and Shares ISA today.

Netflix

I have bought Netflix for my own ISA and would consider adding more. Like Amazon, the shares have fallen in the past 12 months – in Netflix’s case by 60%.

But the business has some advantages — from its large existing user base to a unique library of content it has created. While growing competition could hurt both revenues and profits in coming years, I think the company has the ability to thrive as long as it can give viewers what they want. And at a price that seems like decent value in a worsening economic environment.

Loading up my Stocks and Shares ISA

A Stocks and Shares ISA is often about buying and holding shares as a way of trying to accumulate wealth over the long-term. That is why I am using what I think are attractive prices for some great tech stocks to build my own ISA.

Warehouse operator Tritax’s share price has slumped below 200p for the first time since last summer. It’s down 20% in May as concerns over the impact of soaring inflation on its retail clients have grown.

I think the market has overreacted by selling so heavily, though. Tritax’s operations certainly are sensitive to broader economic conditions. But the business lets out its assets to some of the largest retailers, fast-moving consumer goods and delivery firms on the planet.

These sort of firms have the financial clout to see out tough times and to continue paying the rent. Tritax also ties its tenants down on extremely long contracts, which provides earnings with even better visibility.

Tritax Big Box’s clients include Amazon (NASDAQ:AMZN), Unilever, Tesco, DHL, and L’Oreal.

Non-negotiables

Besides, I would argue that interest in Tritax’s warehouse space should remain resilient even if the broader retail sector sinks. The rate at which e-commerce is growing means that companies can ill afford to scale back investment in warehousing and logistics.

As analyst Sophie Lund-Yates of Hargreaves Lansdown comments, “Despite inflation-linked doom and gloom hanging over many of Tritax’s retail customers, building out a strong logistics network is non-negotiable these days”.

Amazon talks, Tritax sinks

Tritax Big Box’s share price hasn’t simply ducked because of broader macroeconomic worries, though. Investors also sold out as Amazon announced it was going to cool warehouse capacity expansion. This is in response to slowing e-retail activity from the extraordinary levels seen at the height of the pandemic.

The words and actions of the world’s largest online retailer naturally command much attention. However, I think the market might be overestimating Amazon’s changing strategy on Tritax Big Box.

This is because — irrespective of Amazons own actions — demand for space in the UK is likely to continue growing ahead of supply for years to come, pushing rents at Tritax relentlessly higher.

Expanding for growth

Britain is by far Europe’s largest e-commerce market. And online revenues are tipped to reach $285.6bn by 2025. That’s compared with below $200m today.

Tritax Big Box is committed to aggressive expansion to make the most of this opportunity too. The FTSE 250 firm plans to begin development on between 3m and 4m square feet of warehouse space in 2022 alone.

Tritax’s expansion programme does create dangers to shareholder returns. Such large investments can impact dividend levels in the near term. They can open up other dangers, too. For example a poor choice of location could leave the company saddled with a property it might struggle to fill.

That said, Tritax’s strong track record on this front provides me with a lot of confidence. Indeed, I think its commitment to expansion in a fast-growing sector could make the business (which yields a healthy 3.5% for 2022) a great passive income stock in my portfolio for years to come.

High inflation, rising interest rates, and an uncertain political climate are driving down share prices across the board and fuelling a bear market. With that in mind, here are three stocks that I think fit Warren Buffett’s parameters. I’m buying them as share prices come down.

Amazon

First on my list is e-commerce giant Amazon (NASDAQ:AMZN). The Amazon share price has come down by over 30% since the beginning of the year and I’m using the drop to add to my investment in the company.

Amazon’s declining share price isn’t just the result of general market movements. The company’s most recent earnings report was disappointing – the company announced a loss of $7.56 per share and its stock fell in response.

While I agree that Amazon’s performance in the last quarter was disappointing, I think the market’s response is an overreaction to the company announcing a reduction in the value of its investment in Rivian Automotive. As a result, I see this as a really attractive opportunity to add shares in Amazon to my portfolio. 

StoneCo

I’ve also been buying shares in StoneCo (NASDAQ:STNE) recently. The Brazilian fintech’s stock has also been struggling recently and its shares now trade under $10. Considering Berkshire Hathaway was buying shares at around $31 when the company first became public, I think that the current share price is quite attractive.

Like Amazon, the decline in StoneCo shares isn’t just due to factors affecting the market overall. Higher inflation in Brazil, an over-ambitious investment in Banco Inter, and complications with the company’s loan business have caused the stock to fall over 85% in the last year.

I think that a good amount of the StoneCo’s struggles will subside over time, though. The company’s balance sheet looks strong to me and while I see the risks associated with the stock, I’m happy buying the shares at a greatly depressed price.

Verizon

The last stock that I’m buying at the moment is Verizon Communications (NYSE:VZ). The stock is currently trading on a low price-to-earnings (P/E) multiple of around 9, but I don’t think this tells the full story. 

As a business, Verizon has around $147bn in debt that poses a risk to consider from an investment perspective. That needs to be paid off before returns to shareholders. 

Despite this, I think that the business is attractively priced. Even accounting for the company’s debt, I think that as a Verizon shareholder, I can realistically hope for a return of around 8.56%.

As it is a 5G infrastructure company, I expect demand for Verizon’s services to remain fairly steady for the foreseeable future. Given this, I’m very happy buying shares at the current $48 price.

Summary

Amazon and StoneCo are both companies expecting substantial growth over time. Verizon is more of a solid and steady operation. In the current bear market, I’m happy buying all three.

In the past, buying AMZN stock after big pullbacks has turned out to be a very profitable move. So is this latest share price fall a great buying opportunity for me? Let’s take a look.

Four reasons to buy Amazon shares in 2022

Looking at the investment case for Amazon stock today, there’s a lot to like, in my view. I think the biggest appeal of the company is the growth it’s generating in its cloud computing division, AWS.

In the first quarter of 2022, revenue in this segment came in at $18.4bn, up 37% year-on-year. Looking ahead, I expect cloud revenues to continue rising rapidly. This section of the market is projected to grow by around 15-20% a year over the next five years and Amazon is the sector’s leader with a 33% share.

I also like the fact the company now has 200m+ Prime users. This is a big deal as these tend to spend more on its e-commerce platform. They also provide the company with a mountain of data that it can use to develop its artificial intelligence capabilities. It’s worth noting here that Amazon recently lifted its Prime fee in the US from $119 to $139. This extra cash will go straight to the bottom line.

Another appeal here is the growth the company is generating in its advertising division. In the last quarter, advertising revenues amounted to $7.9 billion, up 23% year-on-year. This segment could still be in its infancy too.

Finally, the valuation also seems reasonable. If we use next year’s earnings forecast (for the year ending 31 December 2023) of $53.10, the forward-looking P/E ratio here is about 42. That is high on a relative basis, but I’m comfortable with it given Amazon’s brand power (it’s one of the biggest brands in the world), growth, and dominance in cloud computing and e-commerce.

Risks

There are a few risks to consider here though. One is the performance of the group’s e-commerce division in the short term. Ultimately, Q1 results show that Amazon’s online shopping business is not well suited to the current inflationary environment.

Higher costs for staff, freight, and logistics are hammering the bottom line. For the quarter, operating income fell to $3.7bn, compared with $8.9bn in the first quarter of 2021. For Amazon’s profits to recover, it needs inflation to moderate.

A second risk is around consumer spending. Right now, a lot of consumers are struggling due to high energy costs. If they start to cut back on spending, Amazon, which sells a lot of discretionary goods, could be impacted. It’s worth noting that for Q2, the business forecast sales of between $116bn and $121bn. Analysts had been expecting $125.5bn (which is one reason the share price tanked after Q1 results).

Amazon shares: my view now

Overall however, I think the stock has a lot of appeal after its recent pullback. The share price could continue to be volatile in the near term. But in the long run, I expect it to move higher.

Recent trading update 

The Amazon share price has continued to fall after it released its Q1 results at the end of April. This is unsurprising. For example, in a clear signal that e-commerce figures were starting to weaken after the pandemic, net sales from the company’s online store were down 3% year-on-year to around $51bn. Overall, net sales were up 7% to around $116bn, far slower growth than in the past couple of years. 

There was also more negative news, including the company’s surprising Q1 loss. This loss was mainly caused by the recent poor performance of Rivian, of which Amazon owns around 18%. As the Rivian share price has sunk around 70% since its IPO, this has caused issues for the business. This included a pre-tax valuation loss of $7.6bn, meaning that the net loss for the company totalled $3.8bn overall. This compares to net income of $8.1bn in the previous year. Clearly, this demonstrates that the online retail giant is struggling in comparison to last year, and it’s the reason why the Amazon share price sank on the back of these results. 

Future guidance was also underwhelming, with sales only expected to increase around 5% year-on-year in Q2. This represents the overall struggling growth in e-commerce at the moment, further highlighted by the underwhelming results released by both Shopify and eBay. 

What other factors are there? 

Although the e-commerce segment is struggling in comparison to last year’s performance, there can be some encouragement taken from the other sectors of the business. For instance, the Amazon Web Services sector saw sales of over $18bn, a 37% increase year-on-year. The advertising services business also saw growth of 23%, which highlights that this equally has promise. As such, these sectors may be able to offset the current weakness in the e-commerce segment moving forwards. 

Using last year’s results, the company also has a price-to-earnings ratio of around 35. This is far lower than historically, which may indicate that the Amazon share price is too cheap. However, a P/E ratio of over 30 indicates that strong further growth is expected. Due to evidence of this slowing growth, I’m not convinced that it can achieve these expectations. 

Is the Amazon share price a bargain not to be missed? 

Overall, I’m not convinced about the firm at its lower share price, due to evidence of its slowing growth. At a P/E ratio of over 30, alongside the fact that earnings are likely to be far lower this year than last, I’m therefore leaving this stock on the sidelines.