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Amazon (AMZN) to Open Second Fulfillment Center in Alberta

Zacks Equity Research

Amazon.com Inc. AMZN announced plans to open its second fulfillment center in Alberta, in order to meet the growing demand in the online shopping space.

The company has been spending heavily on its new fulfillment centers over the past few years. Fulfillment centers are giant warehouses that help online retailers store and ship products, as well as handle returns quickly. These are important for providing the level of service that customers have started expecting from Amazon.

Shares of the company have gained 26.6% against the industry’s decline of 6.7% over the past year.

Inside the Headlines

According to Amazon, the new facility in Leduc County, spanning one-million square foot, will create more than 600 full-time jobs. The center will primarily focus on larger items such as outdoor equipment, patio furniture and bicycles.

The world’s largest online retailer has been strengthening its presence in Canada. It continues to hire manpower to meet the growing customer demand in Canada. The company already has fulfillment centers in Alberta, British Columbia and Ontario. The new facility in Alberta will bring the total count to 11 in Canada.

Amazon stated that it pays competitive wages, and provides healthcare along with other full-time benefits. In addition, the company offers programs like Career Choice to help employees pursue courses related to fields that are in demand. The online giant also provides other benefits like generous maternity and parental leaves.

Our Take

Amazon has been strengthening its presence all over the world.

In our view, Amazon must maintain its U.S. market share while expanding globally, in order to retain the leading position of the company. To this end, it needs to invest more in fulfillment, as well as technology and content, especially in international markets with less penetration and higher growth rates.

Though increased expenses may hurt Amazon’s bottom line in the near term, we believe that this is necessary to maintain its dominance in this highly competitive market.

Amazon.com, Inc. Price and Consensus

 

Amazon.com, Inc. Price and Consensus | Amazon.com, Inc. Quote

Zacks Rank & Stocks to Consider

Amazon currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader technology sector include AMETEK, Inc. AME, QuinStreet, Inc. QNST and Stamps.com Inc. STMP, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Long-term earnings growth rate for AMETEK, QuinStreet and Stamps.com is currently pegged at 11.18%, 25% and 15%, respectively.

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