Amazon (AMZN)
By
Timothy Lutts, Chief Investment Strategist and Editor of
Cabot Stock of the Month Report
From Cabot Wealth Advisory, 3/30/09
Sign up for free Cabot Wealth Advisory e-newsletterWhich successful digital company could compete for a piece of the U.S. Postal Service business and bring it into the 21st century?
I suggest
Amazon.com (AMZN). Clearly, the company is skilled logistically; it's become successful not only by selling books from retailers to individuals but by selling everything from everybody to everybody else, and getting them delivered correctly, too.
But I'm not suggesting Amazon get into the delivery business. I'm suggesting that Amazon's Kindle, the electronic book-reader, might just be the revolutionary piece of technology that could deliver personalized content to your house, eliminating the need for so much of that paper that fills your mailbox.
And I assume the brains at Amazon are working on it.
Even without that, business is very good at Amazon. Revenues, which totaled $19 billion last year, have grown every year of the past decade (39% and 29% in the past two years), though earnings growth has been less linear. But analysts recently raised their estimates for 2009 and 2010.
Technically, the stock looks great; it's obviously under heavy accumulation. Back on March 2, it earned a spot in Cabot Top Ten Report, where editor Mike Cintolo wrote:
"So why is AMZN so strong? In part, we think it's because the stock is still not over-owned; fewer than 500 mutual funds own the stock. In part we think it's because the company is truly international; 47% of revenues come from outside the U.S. In part we think it's because the company is still achieving double-digit annual revenue growth. And in part we think it's because the company's Kindle, the electronic book platform, has been well received. While the company refuses to divulge sales figures, reviews of the original Kindle, and now the Kindle 2, have been quite positive. Furthermore, the ongoing implosion of the paper-based newspaper industry has created an opportunity for an electronic newsreader, and Kindle is the leading contender in the early phase of the race. In short, the stability of revenue flows from its budget-priced merchandise combined with the promise of what the Kindle might achieve make an attractive package."
When that was written, AMZN was trading at 62. Since then it's climbed to 75, and in the past week it's pulled back normally to 70. So you could buy it here. But even smarter would be buying a no-risk subscription to Cabot Top Ten Report, so you'd be kept up to date on Mike's latest recommendations.
Editor's Note: Cabot's proprietary screening software ferrets out the 10 strongest stocks each week, no matter what's happening in the market. Cabot Top Ten Report routinely beats the market by finding strong leaders like these past picks: In 2006, NutriSystem was up an amazing 480% in 11 months. In 2007, DryShips was up 510% in 10 months. Even during last year's bear market, Cabot Top Ten Report has found winners in stocks like Cleveland-Cliffs, which doubled in four months, Continental Resources, which rose 160% from its recommendation to its peak, and Walter Industries, which rocketed from 42 in January to 112 in early July. Click the link below to discover the strongest stocks in the market today.
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