Amazon (AMZN): Big Earnings Winner

November 3, 2017

Amazon (AMZN) soared 13% last Friday on more than five times average volume following the company’s earnings announcement.

What I like: I learned long ago never to underestimate a big, liquid growth stock that gaps up more than 10% to new highs following earnings, which is just what Amazon did. I also like that the stock has so far held and even built on those gains, and the stock’s relative performance (RP) line—which compares the stock’s action to the S&P 500—also hit a new high. And, of course, the fact that revenue growth accelerated sharply and earnings crushed estimates (and caused analysts to hike their numbers) is a plus.

Any potential problems? Only that AMZN is well loved, and before the gap, the stock looked very iffy, building what could have been an intermediate-term top. It’s also not the most volatile stock (percentage-wise), so I wouldn’t expect a mega-run from here.

My take: There are never sure things, but the power and size of the gap and the action since, combined with the overall bull market, tells me AMZN has a good chance of heading higher and notching solid (though not spectacular) gains. It’s buyable around here (just buy fewer shares because of the high price) with a stop near 1,040.

Read More

Whole Foods Markets (WFM): Double-digit percentage revenue growth

By Paul Goodwin, Chief Analyst, Cabot China & Emerging Markets Report
From Cabot Wealth Advisory 11/29/14 Sign up for Cabot Wealth Advisory—it’s free!

Whole Foods Markets (WFM) is the dominant player in the specialty grocery business. Whole Foods is easy to lampoon for its high prices (Whole Paycheck Markets) and for its patrons’ sometimes excessive obsession with organic, fresh, local, sustainable, no-cruelty, no chemicals, no GMEs food and drink.

But the company’s five straight years of double-digit percentage revenue growth, with earnings growth to more than match, are no joke. And the company’s continuing build-out of new stores in Canada is keeping revenue growth on track. The most obvious feature of the chart for WFM is its more than 20% dive last May, when the company’s quarterly earnings report showed the effects of increased competition, price pressure and inclement weather. After that May plunge from 48 to 37, WFM traded sideways, finding support at 36/37 and resistance at 40 (despite a short-lived June rally).

But six months to the day after its free-fall, WFM blasted off on more than six times average volume, hitting 45 in one day and following through on its breakout to 48, which was its price before the May washout.

I think Whole Foods is a great operation, offering high quality produce, beer and wine, cosmetics, baked goods, clothing and restaurant services to consumers who care deeply about what they consume.

WFM looks like a good buy right here, as it has a long way to go to reach the high of 65 that it hit in October 2013. A small dividend (forward annual yield of 1.1%) ties up a nice package.

Whole Foods Market (WFMI): Following the “cookie cutter” system 

By Timothy Lutts, Chiel Investment Strategist and Editor of Cabot Stock of the Month Report

From Cabot Wealth Advisory 7/12/10 Sign up for free Cabot Wealth Advisory e-newsletter

I’m optimistic that the bottom of the May-June correction has passed, and that the market is now gathering strength in preparation for a new leg up. I’m optimistic in part because so many people are pessimistic! I think the unrelenting media focus on the BP oil leak has really skewed people’s perceptions of reality. But I can’t call it a bull market until I actually see major market trends advancing again.

Still, I’ve been busy building a Watch List.  Mine currently has 21 stocks on it, and today I’m going to tell you about the stock that’s been on my Watch List the longest.

The graybeard is Whole Foods Market (WFMI), the leading retailer of organically grown food in the world. Whole Foods is prospering by using the Peter Lynch “cookie cutter” system; find a retailing concept that works, and then build more of them, while continually experimenting with tweaks to the formula.

 

It’s a formula that was perfected by McDonalds (MCD), which is still a decent investment for conservative money. And Whole Foods, which has grown revenues every year of the past decade and now has more than 295 stores in 38 states, the U.K. and Canada, is following the recipe perfectly. 

Its profit margins in the last quarter were 3.1%, obscene for a grocery store.  Its revenues grew 14% from the quarter before. Its earnings grew 52%. And after slowing store development in the recession, management is now expanding once again.  Founder John Mackey, in fact, is one of the smartest, most forward-thinking, most human-focused retailers in the business today.

Fiscal third-quarter earnings will be reported August 3 and I have no doubt they’ll be terrific. 

Technically, WFMI is attractive here because it’s pulled back to nearly touch its 200-day moving average in recent weeks. Also, 34, where the stock bottomed last week, is where it bottomed after gapping up after its earnings announcement in mid-February.

Long-term, I think it’s a winner.



Tim LuttsTimothy Lutts

President, Chief Investment Strategist, Editor of Cabot Stock of the Month

Timothy Lutts heads one of America’s most respected independent investment advisory services, publishing eight newsletters to more than 165,000 subscribers around the world. Tim leads a dedicated team of professionals who serve individual investors with high-quality investment advice based on time-tested Cabot systems. Under his leadership, Cabot has been honored numerous times by both Timer Digest and the Hulbert Financial Digest as among the top investment newsletters in the industry. Tim also edits Cabot Stock of the Month.

Read More

Amazon.com (AMZN): Undervalued or Overvalued?

By J. Royden Ward, Chief Analyst, Cabot Benjamin Graham Value Investor
From Cabot Wealth Advisory 9/20/16 Sign Up for Cabot Wealth Advisory—it’s free!

Amazon (AMZN)
sells merchandise and products purchased for resale from vendors as well as from third-party sellers through retail websites such as amazon.com. 1-Click shopping, Kindle Direct Publishing, Kindle, Fire tablets, Fire TV, Amazon Echo and Alexa are some of the products and services pioneered by Amazon. Amazon is led by Jeff Bezos, the 52-year-old founder, chairman and CEO.

Amazon earned $4.02 per share and generated $121 billion in sales during the 12 months ended June 30, 2016. The company is expected to grow earnings at a torrid 50% rate during the next three to five years with more rapid growth expected during the next two years. However, at 193.6 times current EPS (earnings per share), AMZN shares appear to be clearly overvalued. However, we can examine AMZN further by calculating the stock’s PEG ratio.

Using the PEG ratio to determine if a stock is undervalued or overvalued provides a clear evaluation for a growth stock. The PEG ratio is calculated by dividing the price-to-earnings ratio by the expected earnings per share growth rate during the next five years. Based on the company’s current EPS and expected earnings growth (50% per year) during the next five years, AMZNs current PEG ratio is 3.87. However, if we look at Amazon’s future value two years from now, AMZN’s PEG ratio is a more reasonable 1.98.

I like to buy growth stocks with PEG ratios of 1.00 or below. To achieve a two-year forward PEG ratio of 1.00, AMZN shares will need to plunge to 393.50. I doubt that AMZN will drop to 393.50 anytime in the future. Therefore, I recommend avoiding Amazon unless you are a nimble trader and can time your purchase and sale profitably.

Click here for more information.

By Elyse Andrews, Editor of Cabot Wealth Advisory
From Cabot Wealth Advisory 10/23/10 Sign up for free Cabot Wealth Advisory free e-newsletter

Last Saturday, I had the pleasure of attending the second Boston Book Festival. It’s fitting that our historic city has an event devoted entirely to the written word, as it is home to the oldest free public city library in the world supported by taxation and the first to allow its patrons to borrow books and other materials.

In recent years, people have bemoaned the effects the rise of the Internet and e-readers have had on books, but the festival proved that while the medium in which we read books may be changing, the written word is here to stay.

Last year when I attended the festival, I wrote about Amazon.com (AMZN), maker of the Kindle e-reader. After that, the stock has meandered higher, ultimately topping out with the overall market in the spring. It got hit in the summer volatility, but has climbed rapidly since the market resumed its upward trend in early September. This is what Cabot Top Ten Weekly Editor Michael Cintolo had to say about it on September 13:

“Retail has not been the place for growth stock investors in recent months, but there have been some signs of life in the sector, and Amazon remains a leader in the field. The reason for the stock’s strength lately surrounds its major price cut for the new version of its Kindle e-book reader, which can be had for $139 (compared to $399 when it was first released three years ago). That price cut is sparking sales of the device in a big way—one analyst sees nearly five million Kindle sales this year alone—and it doesn’t hurt that Best Buy will also begin selling the Kindle at its stores in the weeks ahead. Of course, the Kindle is just one piece of Amazon’s story; top management has guided the firm into the #1 position in online retail. We like the 40%-plus sales growth each of the past three quarters despite the weak retail environment, as well as the 35% earnings gain projected for 2011. It’s not a new story, yet it looks like the company is set to get a lot bigger in the quarters to come.”

If the trend toward reading on devices, rather than from books, continues, the stock stands to benefit. You could buy AMZN here and hope for the best or you could get more expert buy, sell and hold advice from Mike in Cabot Top Ten Weekly. Click here to learn more about Amazon and other leading stocks.



Elyse AndrewsElyse Andrews

Editor of Cabot Wealth Advisory

Elyse Andrews edits Cabot Wealth Advisory, a free email newsletter that offers independent, no-nonsense investment advice on how to build long-lasting wealth written by Cabot’s analysts and editors. Every Saturday, Elyse writes the Weekend Digest, which includes her column and a summary of Cabot Wealth Advisories that readers may have missed during the week. Elyse is also a regular contributor to The Iconoclast Investor, a blog for Cabot editors and readers to share their views and interact with each other.


Amazon (AMZN): A big, liquid leader

By Michael Cintolo, Vice President of Investments and Editor of Cabot Market Letter and Cabot Top Ten Weekly
From Cabot Wealth Advisory, 10/14/10. Sign up for free Cabot Wealth Advisory e-newsletter

An option when building your Watch List is to look for a big, liquid leader that has the potential to gap up on earnings. One near the top of my own list is Amazon .com(AMZN). While the Kindle e-book reader is still selling well (thanks to a recent price cut), I think the bigger story is simple—e-commerce is becoming a larger piece of general retail sales, and Amazon itself is becoming a bigger chunk of e-commerce sales!

I also like that, after a good run in 2009, AMZN really did nothing from January through the end of August; that’s enough time, with enough of a correction, to shake out all the weak hands. However, after finding massive-volume support along its lows in July, Amazon tightened up in August and then moved straight up in September, from 131 to 162.

Now shares have chopped around for three weeks as investors wait on earnings, which are due out next Thursday. Any substantial gap up would be a green light to dive in.


Cabot Market Letter: Cabot Clobbers the Stock Market!
Numbers don’t lie. And here are an impressive few:
♦ For the past two difficult years, Cabot socked the S&P 500 by a whopping 82%. (Market was down 26%.)
♦ For the past five years, Cabot stomped the market by a hefty 60%. (Market was down 8%.)
♦ For the past 10 years, Cabot dominated the market by a staggering 113%! (Market was down 26%.)
Here’s how you can clobber the market too. Click here for more information.


Amazon.com (AMZN): Hoping for a gap up after earnings

By Michael Cintolo, Vice President of Investments and Editor of Cabot Market Letter and Cabot Top Ten Weekly
From Cabot Wealth Advisory, 4/15/10. Sign up for free Cabot Wealth Advisory e-newsletter

Amazon.com (AMZN) has not been a leader during this advance–the stock is just now testing its peaks from December. However, for all the talk about Apple’s iPad possibly killing Amazon’s Kindle e-reader, business at Amazon seems to be doing great. Nearly all retail firms are benefiting of late, and Amazon, even before the latest pickup in the economy, was forecast to grow its bottom line 40% this year and another 30% in 2011.

Thus, when Amazon reports earnings next Thursday (April 22) after the closing bell, I’ll be watching to see if it can react strongly and thrust to new highs; the bigger the upmove the better. I think buying a small (only small!) position here is OK, with the idea of buying more if the stock’s first-quarter report brings the type of gap I’m hoping for.

Editor’s Note: Cabot Market Letter subscribers are currently enjoying a solid 10% profit in Amazon and as Mike wrote above, he believes the stock has a lot more upside potential. To get all of Mike’s top growth stock picks, as well as detailed market timing advice, try Cabot Market Letter. There’s a reason Hulbert Financial Digest named Cabot Market Letter to its Honor Roll … find out why! Click here to get started today.


Mike Cintolo Michael Cintolo
Vice President of Investments and Editor of Cabot Market Letter and Cabot Top Ten Weekly

A growth stock and market timing expert, Michael Cintolo is editor of Cabot Market Letter and Cabot Top Ten Weekly. Since joining Cabot in 1999, Mike has uncovered exceptional growth stocks and helped to create new tools and rules for buying and selling stocks. Perhaps most notable was his development of the proprietary trend-following market timing system, Cabot Tides that has helped Cabot place among the top handful of market-timing newsletters numerous times.


Cabot Top Ten Weekly: Our Scientific “System” Uncovers 10 Market Winners Every Week!

Enjoy gains of 76%, 107%, 131% and more in less than three months. No gimmick. No catch. No monkey business. Just a simple scientific stock-picking system combined with Cabot’s 40 years of investing analysis. The Result: 10 HOT Stock Picks—delivered directly to your inbox every week. Get your first 80 trades risk-FREE! Find out more here!


Amazon.com (AMZN): Impressive quarterly revenues

By Michael Cintolo, Vice President of Investments and Editor of Cabot Market Letter and Cabot Top Ten Weekly
From Cabot Wealth Advisory, 4/30/09 Sign up for free Cabot Wealth Advisory e-newsletter

I’m now seeing many stocks with real growth stories shooting ahead after stellar reports (not just turnaround plays that are reporting “not as bad as we thought” earnings).

Amazon/com (AMZN) reported first quarter revenues of $4.89 billion, up 18% from a year ago, which is very impressive given the horrific economy. Earnings jumped 21% to $0.41 a share—not the fastest growth in the world, but that number beat estimates by 10 cents a share, and again, a big retailer producing 20% growth during the first quarter’s economy spells big potential going forward.

Really, though, Amazon’s sexiness has to do with Kindle, and by all accounts, sales of the e-book reader were great. AMZN reacted well to earnings last Friday, but has pulled back this week. I can’t say this is my favorite stock in the market, but I do believe it’s a liquid leader, and with retail stocks generally acting well, I think it can be nibbled at around here, or on weakness; the 50-day moving average (at 72) should provide support on any further pullback.

Editors Note: Michael Cintolo is the editor of Cabot Top Ten Weekly, which discovers the 10 strongest stocks in the market each week. The Report routinely beats the market by finding strong leaders like these past picks: In 2005, Hansen Natural gained a whopping 570%. In 2006, NutriSystem was up an amazing 480% in 11 months. In 2007, DryShips was up 510% in 10 months. Even during 2008’s bear market, Cabot Top Ten Weekly 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 this link to discover the strongest stocks in the market today: Cabot Top Ten Weekly 


Amazon.com (AMZN): Could turn into an institutional favorite

By Michael Cintolo, Vice President of Investments and Editor of Cabot Market Letter and Cabot Top Ten Weekly
From Cabot Wealth Advisory, 4/16/09 Sign up for free Cabot Wealth Advisory e-newsletter

My 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). Click here for more information.


Amazon.com (AMZN): Candidate to run U.S. Postal Service?

By Timothy Lutts, Chief Investment Strategist and Editor of Cabot Stock of the Month
From Cabot Wealth Advisory, 3/30/09  Sign up for free Cabot Wealth Advisory e-newsletter

Which 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 Weekly 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 Weekly 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 this link to discover the strongest stocks in the market today: Cabot Top Ten Weekly


Tim LuttsTimothy Lutts
President, Chief Investment Strategist, Editor of Cabot Stock of the Month

Timothy Lutts heads one of America’s most respected independent investment advisory services, publishing eight newsletters to more than 165,000 subscribers around the world. Tim leads a dedicated team of professionals who serve individual investors with high-quality investment advice based on time-tested Cabot systems. Under his leadership, Cabot has been honored numerous times by both Timer Digest and the Hulbert Financial Digest as among the top investment newsletters in the industry. Tim also edits Cabot Stock of the Month.

 


Cabot Stock of the Month: The Best Stock Across All Sectors

If you want to diversify your portfolio and profit from using several different investing philosophies to pick winning stocks, Cabot Stock of the Month is right for you. Not only is it priced so low that every investor can afford it, you’ll recover it from your very first profitable investment. Learn more about Cabot Stock of the Month today!

Company Details

Amazon.com (AMZN)
1200 12th Avenue South, Suite 1200
Seattle, WA 98144-2734
206-266-1000
http://www.amazon.com
Index Membership: S&P 100; S&P 500; S&P 1500 Super Comp; Nasdaq 100; AMEX Internet
Sector: Services
Industry: Catalog & Mail Order Houses
Full Time Employees: 24,300
Read More

Stock Chart