Amazon.com (AMZN)
By
Michael Cintolo, Vice President of Investments and Editor of
Cabot Market Letter and
Cabot Top Ten ReportFrom Cabot Wealth Advisory, 4/16/09
Sign up for free Cabot Wealth Advisory e-newsletterMy system thrives on the action of leading stocks—those with great sales and earnings growth, big stories and revolutionary products. And thus far, there haven't been a ton of leaders setting up in high-odds buying patterns.
Why leading stocks? Why not focus on all stocks, junk included? Simply put, because leaders LEAD the market higher on sustainable runs. There has never been a sustainable rally that hasn't featured many powerful leaders heading higher. And leaders are where the biggest winners in history have been found! So, while in the short-run it can be lucrative to play those lower-priced, beaten-down sectors, over time your best profits will come from the leaders.
And some of the best leaders are the big, liquid ones—the stocks that trade millions of shares per day that institutions can pile into. For example, this well-known company is reporting earnings soon and big gaps up could kick-off new advances.
Amazon.com (AMZN), truth be told, isn't sporting the earnings growth these days that I crave. That's mainly because of the recession, but more important to me is the fact that the firm's Kindle, its e-book (and potentially e-everything) reader, could be an absolute game changer in the quarters ahead. The stock has come a long way from its lows of last year, but remains off its 52-week high. AMZN reports earnings next Thursday evening, and a strong gap of more than 10% that puts the stock above 85 or 90, would be tempting.
There are many other earnings reports to consider in the weeks ahead, but this is a big, liquid stock that could turn into an institutional favorite following its report.
Editor's Note: Cabot Market Letter's three market-timing indicators are all flashing BUY! Editor Michael Cintolo has already purchased four leading stocks for the Model Portfolio and he expects to buy more soon if the market holds up. From the market's bottom in March 2003 to the recent low in March 2009, the S&P 500 lost 18% in total and the Nasdaq lost 3.5%. Cabot Market Letter, however, left them in the dust: Advancing a total of 94% during the past six years (nearly 12% per year).
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