Displaying items by tag: Amazon

Wednesday, 29 August 2018 08:45

Walmart’s Stock Has Legs

(New York)

For a long time, Walmart was one of the greatest growth stocks in history, growing from a small regional company to the largest retail chain in the nation. However, growth has evaded it for some time, and its quick expansion ended about 20 years ago. That may all be about to change, however. Walmart’s ecommerce operation is really taking off, growing at a 40% clip, at the same time as its in-store sales are rising at their fastest pace in a decade. Walmart is already the fourth largest online retailer in the US, but the stock has not given full credit to how well the company is doing, creating an opportunity for investors.


FINSUM: Walmart’s acquisition of Jet in 2016 was a smart one, and it has shown good leadership in ecommerce. We suspect the stock has a few years of good growth coming.

Published in Eq: Large Cap
Tuesday, 21 August 2018 09:12

Tech Companies Should Expect Regulation

(San Francisco)

Talk about comments coming right from the source. Microsoft CEO Satya Nadella went on the record this week telling the market that tech companies should “expect” regulation. Nadella walked through current areas of tech and regulations, like facial recognition or GDPR, and explained their implications for the industry. He said that “As tech becomes more and more pervasive, I think for all of us in the tech industry we should expect—whether it’s on privacy or on cybersecurity or even ethics or AI—government and regulatory bodies to take interest in it”.


FINSUM: We think the writing is on the wall that tech is going to face some form of regulation, especially given that the Trump administration is rather hard on the sector. The question is when, not if.

Published in Eq: Tech
Monday, 13 August 2018 09:14

Retail Still Looks Like a Good Buy

(New York)

2017 was a terrible year for the retail sector. It was nothing short of an apocalypse. Thousands for stores were closing, dozens of brands going bankrupt, and big stock sell-offs. It was the first phase of the predicted meltdown to be caused by the shift to ecommerce. However, this year retail stocks have soared, with the leading retail ETF (XRT) up 35% from its low last year. That said, there are still some great buys. The sector’s overall P/E is still just 16.4, well below its historical average of 18.8. Store closings have stabilized margins and consumer confidence and spending are rising, a strong proposition for the sector. Some good names to look at are Kohl’s, Gap, and Michael Kors.


FINSUM: Retailers are starting to figure out how to navigate the new ecommerce-driven paradigm, and the sector’s future is looking much brighter than it did 18 months ago.

Published in Eq: Large Cap
Thursday, 28 June 2018 09:42

There is No Bubble in Tech

(San Francisco)

Many investors are currently worried about the potential for a tech bubble. Between high valuations, data breaches, and a growing call for more regulation of the sector, it is easy to feel bearish. However, Barron’s is telling investors to not be too worried. The opinion is based on analysis of tech price movements and outperformance against a new Harvard study. Historically speaking, a bubble can be referred to as at least a 100 percentage point outperformance of a sector versus the market as a whole over a two-year period, followed by at least a 40% drop over the following two years. By that metric, the tech sector isn’t even close, as it has only outperformed the market by 36% over the last two years.


FINSUM: So this was a valuation-based study, but it could theoretically also be applied to individual stocks. When you do that, both Amazon and Netflix look vulnerable, as both have satisfied criteria for a bubble.

Published in Eq: Tech
Wednesday, 13 June 2018 09:32

Amazon-Proof Retail Strategies

(New York)

The whole retail world is centered on Amazon right now. Will ecommerce, led by Amazon, continue to disrupt traditional retailers? That is the nauseatingly frequent question being fretted over by investors. Well, here are a group of Amazon-proof strategies that investors can use to pick retail stocks. The core of the argument is that retailers need to focus on the areas that Amazon is not good at offering. In particular: “experience; customer service; partnerships with influencers; and personalization”. Private label brands are another area, as companies like Target have launched in-house brands that are exclusive to their stores.


FINSUM: We believe in three of the areas mentioned, but in-house brands and customer service are not good strategies to outcompete Amazon in our mind. In-house brands just aren’t compelling enough (especially nascent ones), and we feel Amazon has better customer service (at least online) than almost anyone.

Published in Eq: Large Cap
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