Wednesday, 23 January 2019 09:45

Amazon’s Big Upside

(Seattle)

Are you looking to find a good investment thesis for Amazon? Look no further than their growing private label business, which could prove a catalyst for expanding margins and share price growth. According to an analyst at Suntrust Robinson Humphrey, “The rise of private labels and exclusives is one of the least understood/most under-appreciated trends within Amazon”. He continued, “This strategy should strengthen the flywheel effect of proprietary offerings/better user experience/higher retention/spend/share gain, and should prove accretive to margins over time”. The profit margins on own-branded products are 7-15% higher than on other branded products.


FINSUM: Because of their huge user base, Amazon is in a good position to benefit from selling their own brand, as they have a ready audience. This will likely improve overall margins as the business expands.

Published in Eq: Tech
Monday, 07 January 2019 08:34

9 Stocks to Outpace Amazon

(New York)

Retail stocks are in a tenuous position. They thrived to begin 2018, and for three quarters rolled to solid gains. Then in the fourth quarter they got rocked despite the fact that they had been gaining momentum from healthier consumer spending and a stronger than expected holiday shopping season. So what to do? Jefferies says it is time to buy the dip, based on the fact that “The consumer is strong, Amazon isn’t killing retail, the Federal Reserve is more dovish, oil down, first-half weather compares easy, free cash flow piling up, margins are moving up and consumer discretionary stocks are cheap on absolute and relative basis”. Check out these names: Gap, American Eagle Outfitters, Five Below, Foot Locker, Kohl’s, Urban Outfitters, Under Armour, Tapestry, and Lululemon Athletica.


FINSUM: Our view is that at some point soon (has it already happened?), ecommerce and brick and mortar are going to fall into equilibrium. When that happens, it will be good for traditional retailing stocks.

Published in Eq: Total Market
Thursday, 27 December 2018 13:33

Walmart Looks Like a Great Buy

(New York)

Walmart has taken a pounding this year. The stock is down 8.4% even though it has seen solid earnings performance. The reason why? Shares first got beat up early in 2018 when investors worried its digital strategy wasn’t taking hold. Then in the middle of the year worries about margins cropped up. Finally, in November, shares saw losses even though Walmart beat earnings and raised payouts. Interestingly, the shares were a counterpoint to the rest of retail, which saw gains for much of the year.


FINSUM: We think Walmart is a great buy. It has good same store sales momentum and its ecommerce operation is growing rapidly. This seems like a good buying opportunity to us, especially as the brand sells consumer staples, which will hold up even in an economic downturn.

Published in Eq: Value
Thursday, 20 December 2018 11:42

A Great Beaten Down Stock

(Portland)

A lot of investors may be looking for stocks with good value at the moment. Stocks that are badly beaten up, but have good underlying businesses, can be prime buys during adverse market conditions. With that in mind, take a look at Nike. The sportswear giant has shed 16% this quarter and will release earnings later today. Investors’ skepticism will either be proven correct, or wrong. The thing is, the core business looks compelling. The company gave guidance in September that it was expecting currency-neutral revenue to grow 9%. One analyst summarized the stock this way, saying “buy Nike into earnings. Nike sales are gaining momentum and the company is gaining market share across channels and geographies.”


FINSUM: Nike has done an admirable job catching up to rivals recently, as well as in passing on rising costs to consumers. Our instinct is that this is a good buy.

Published in Eq: Value
Wednesday, 19 December 2018 12:49

Retail Seeing Biggest Selloff Since 2008

(New York)

Retail is in midst of its biggest selloff since the Financial Crisis. Stocks in the sector have not fallen this hard, this fast, since 2008, and that includes the 2017 panic in retail. Retail stocks had been swept up in a sort of cautious optimism this year that had allowed them to see gains. However, they have gotten caught on the wrong side of fears over the economy and trade war, falling a whopping 17% this quarter alone. The big tumble comes despite a quite bullish Christmas sales forecast.


FINSUM: Retail has a lot of problems facing it right now. Outside of the well-known threat of ecommerce, there is also rising labor costs which are pinching margins at the same time as revenue is getting tighter.

Published in Eq: Total Market
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