A Small Step in the Evolution of the Internet of Things?
What’s the Next Amazon?
A few days ago, I was poking around on Amazon’s website, mainly to see what features of that site Cabot could emulate when we redo our website later this year, when I stumbled on a bunch of Amazon Dash Buttons.
They looked like this.
And they were all priced at $4.99.
I was confused.
What is a Dash Button? What does it do? Why should I click on it?
Now, I’m sure some of my readers know the answer to this, but I’ll bet that most, like me, don’t. So, now that I’ve done the research, let me explain.
The Dash Button, like many of Amazon’s innovations, is designed to make ordering things from the company easier.
The little battery-powered device is pre-programmed by interfacing with your smartphone and Wi-Fi, to order frequently used-items from Amazon whenever the button is pushed. And because it can be affixed to a surface with tape, or clipped on, it can be pushed at the exact moment you realize you need to order something. Presumably—looking at the three most popular buttons—the Tide button would be affixed to your washing machine, the Bounty button would be stuck by the kitchen sink, and the Cottonelle button might hang on your bathroom towel rack. In all, more than 60 brands have partnered with Amazon.
(And if you fear that a toddler—or a drunken party guest—might push a button repeatedly, have no fear. You can pre-program the maximum order allowed, and it won’t reset until a delivery is made.)
So, this is one small step forward in the evolution of the Internet of Things (IoT).
But the Dash Button is not a success yet. It was introduced last March, and targeted at Prime members, but so far, user awareness is decidedly lacking. In fact, a quick survey of 11 Cabot employees last week revealed that not even one knew about the Dash Button.
But on the Internet, enough people know that they’ve created parodies of the Dash Button! This, for example.
So what’s my point?
Maybe Amazon is not perfect. Maybe the Dash Button is a flop.
Or maybe Amazon is just early, and it will take time for people to accept the Dash Button into their lives.
Or maybe Amazon is simply taking it slow, getting the kinks out of the Dash Button before they make a bigger push.
In short, the story of the Dash Button is not over.
But Amazon didn’t need the Dash Button to succeed to be a winner in 2015. With revenues up roughly 20% and the stock up 118% in 2015, AMZN was a big winner by most metrics.
2016, however, is a different story. After hitting a new high in the last week of 2015, the stock gapped down the first day of the year, and has been trending down since, joining the crowd in a broad retreat.
And what does experience tell me about a high-profile stock that reverses in this manner? All fundamentals aside, one possibility is that it finds support at 600 and rebounds to consolidate its gains. Alternatively—particularly if the broad market worsens—this new downtrend might erase 50% of the previous advance, a move that would take AMZN down to the 500-region.
In any case, I’m not a buyer of AMZN here, and if I were a shareholder, I’d be lightening up here, or at least setting some close stops.
The Next Amazon
I used to own Amazon once. Bought it in January 1998 (long before the company was profitable) and sold it in January 2000, for a profit of 1,290%. Those were the days!
But I’d rather be hunting the next Amazon now.
It’s much more fun, and my criteria are pretty simple.
Fast growth of revenues.
A great growth story that can persist for years.
A stock that’s outperforming the market, ideally by regularly hitting new highs. (I know, a lot of investors like buying on corrections, and so do I. But to find these stocks, I look for recent new highs.)
For example, my latest discovery looks like this.
This company grew its revenues roughly 80% last year (final numbers aren’t in yet), to roughly $130 million, and it could continue that growth for years to come.
Most investors don’t know the stock; it only came public last April.
But it was hitting new highs last week, even while the broad market was falling to pieces, as investors in the know were accumulating it!
That’s the kind of stock I like to own, and if you’d like to own it too, you can learn its name by becoming a regular reader of my Cabot Stock of the Month, which every month focuses like a laser on one high-potential stock.
Yours in pursuit of wisdom and wealth,
Chief Analyst, Cabot Stock of the Month
Publisher, Cabot Wealth Advisory