Chance Prefers A Prepared Mind
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A few years ago, I was very skeptical of e-readers, as I wrote about a few times in this space. I saw hurdles that they needed to overcome before I would ever consider getting one. Since then, e-readers have improved greatly and I was swayed enough by the changes to acquire one!
I still have some gripes with e-readers (the commitment you make to one technology and the difficulty sharing books), but I really enjoy their small, light size, lower prices and that you can now check books out of the library using the Amazon (AMZN) Kindle, my e-reader of choice.
I absolutely loved bringing my Kindle to France on my honeymoon--it was a far more efficient way to carry the four books I downloaded for the trip. And as a heavy library user, I'm excited to check out books on my Kindle instead of having to pay for each one or give up supporting the library.
I still love physical books, they're great for sharing or passing down to future generations, but I'm really starting to embrace the e-reader too. And I think as time goes on, e-readers will only get better. There seems to be endless news about improvements to them and the industry as a whole.
Just this week, Amazon announced that it was going to start publishing some of its own books, which will pit it in a head-to-head competition with book publishers, agents and others in the industry. But this could also make book publishing more accessible to some authors or make books less expensive for consumers since there would be no middlemen.
Also this week, Barnes & Noble and Books-A-Million said that they would no longer carry DC Comics in their physical stores, as Amazon has signed an exclusive e-reader deal with the company for 100 of its most popular graphic novels. Since the books won't appear in many retail stores, this deal could be a real boon to Amazon!
E-readers aren't meant for every type of book--I'm sorry I bought a guide to running on it, as I'd love to have the printed copy to mark up and flip through from time to time--but it's terrific for reading novels. I'm curious to see how the DC Comics translate onto the Kindle, as e-readers don't seem like a great medium for that type of book. Only time will tell.
Amazon made big headlines a few weeks ago with the introduction of the Kindle Fire tablet, which appears to be the biggest competitor to Apple's (AAPL) iPad yet. It has an ultra-low price point, only $199 versus $499 for the cheapest version of the iPad. Amazon is expecting big sales of the Fire once it starts shipping in mid-November, which should lead to big sales in its Kindle store.
It's clear that Amazon, while it is a huge company and a well-known stock, still has a few tricks up its sleeve. Its competitive pricing in the tablet and e-reader market could give it an edge heading into the all-important holiday season.
The company has seen big sales growth in the last three quarters, up 36%, 38% and 51%, despite a lagging economy. Amazon's earnings have been shifting lower recently, but that's because of the company has been spending on infrastructure. That should end soon and analysts see earnings jumping 64% next year with more gains to follow.
Amazon reports fiscal third quarter results next Tuesday, October 25, after the market closes and depending on the results, this could be one for your portfolio as the market continues to get off the ground.
The stock has been featured in Cabot Top Ten Trader in recent weeks and you can bet editor Mike Cintolo will be watching closely as the company reports Q3 earnings. You could buy AMZN here and hope for the best, or you could get Mike's latest recommendation by clicking here.
If you're looking for a less well-known way to play the e-reader, tablet and smart phone boom, I may have a stock for you. The company develops, markets and sells optical touch screen solutions for handheld consumer and industrial electronic devices.
The company attempted to bring two phones to market during the 2000s, but didn't see success in that crowded area. Instead, it shifted its focus to its revolutionary touch screen technology, where it is starting to see great success.
The company operates as a licensing entity, so it can grow sales exponentially without the added cost of manufacturing. This means the company has little-to-no expenditures required to grow its revenues and can deliver huge gross margins ... in the realm of 100%!
And its touch screens sell for far less than the ones currently on the market, which lowers the cost of any device they're used on.
Best of all, trusted sources have assured Cabot Small-Cap Confidential Editor Thomas Garrity that the Amazon's Kindle will utilize this company's technology and that it could be used in as much as 90% of the e-reader market by the end of the year, making it a big opportunity.
Unfortunately, I can't reveal the name of the stock here because Tom originally recommended it in our limited-subscription Cabot Small-Cap Confidential. The name is reserved for subscribers only, but you can gain access to it and his other winning recommendations (EZ-Chip (EZCH) sold for a 55% gain, Oncothyreon (ONTY) sold for a 65% gain and Silicon Image (SIMG) sold for a 119% gain) by clicking here now.
---Now for this week's Contrary Opinion Button. Remember, you can always view all of the buttons by clicking here.
Chance Prefers A Prepared Mind
The original phrase, attributed to Louis Pasteur, was, "Dans les champs de l'observation, la chance ne sourit qu'aux esprits bien prepares." Google's translation software (reputedly the best) turns it into "In the fields of observation, luck smiles only prepared mind." Cleaning it up, I make it, "In the fields of observation, fortune smiles only on the prepared mind." Sadly, English translations have long used the word "favors,"(not "prefers"), when in fact Pasteur meant "smiles on," and reinforced it with "only." The point, in any case, is that the unprepared mind can find no fortune in the fields of observation--which include the stock market--because it understands not what it sees. Only the prepared mind can observe and accurately interpret, and thus make the decisions that lead to fortune.
In this week's Stock Market Video, Cabot Market Letter Editor Mike Cintolo says the market was down slightly most days this week, but net-net, it's still a tug-of-war between the bulls and the bears, which means you should stay cautious. Looking at the market, it appears that the sellers are sold out, but buyers haven't really declared themselves either. Stocks discussed: Green Mountain Coffee Roasters (GMCR), Netflix (NFLX), Baidu (BIDU), Priceline.com (PCLN), Red Hat (RHT), Dunkin' Brands (DNKN), Under Armour (UA), Intuitive Surgical (ISRG), Google (GOOG) and Vmware (VMW).
In case you didn't get a chance to read all the issues of Cabot Wealth Advisory this week and want to catch up on any investing and stock tips you might have missed, there are links below to each issue.
Cabot Wealth Advisory 10/17/11 - Occupy Wall Street or Tea Party?
On Monday, Cabot Publisher and Cabot Stock of the Month Editor Tim Lutts discussed two opposing political movements--Occupy Wall Street and the Tea Party--and why capitalism will always win out. Tim also discussed the current market situation and discussed a Canadian stock that's been featured in two Cabot newsletters. Featured stock: Lululemon Athletica (LULU).
Cabot Wealth Advisory 10/18/11 - 5 Great Dividend-Paying Stock
On Tuesday, Dick Davis Digests Editor Chloe Lutts discussed one of her subscribers' greatest investing concerns: maximizing dividend income while preserving capital. She then recommended five great dividend-paying stocks. Featured stocks: Duke Energy (DUK), Boeing (BA), Canadian Imperial Bank of Commerce (CM), First Niagara Financial Group (FNFG) and Capstone Infrastructure (CSE).
Cabot Wealth Advisory 10/20/11 - A Stock for Your Inner Value Investor
On Tuesday, Cabot China & Emerging Markets Editor Paul Goodwin discussed why New Hampshire is the right state for the nation's first presidential primary, despite other states trying to get in ahead of it. Paul also discussed some of the differences between growth and value investors and why you should figure out which camp you belong to. He finished by recommending a stock that appeals to the inner value investor. Featured stocks: Tata Motors (TTM).
Until next time,
Editor of Cabot Wealth Advisory