It's no secret Amazon.com Inc. (Nasdaq: AMZN) has been eating other retailers' lunch over the past few years. Even blue-chip companies, like home improvement retailer Home Depot Inc. (NYSE: HD), have felt tremors following rumors of Amazon encroaching on their turf.
That's why we're bringing you five specific ways to profit from Amazon and the changes it has made to the retail market.
One of the most recent high-profile victims of Amazon's success has been Walmart Inc. (NYSE: WMT).
Walmart seemed to be okay for quite a while as it played catch-up to Amazon's superior online presence. Unfortunately for shareholders, the stock peaked in January 2018 at $109.98 and then slipped 20.1% to current levels near $87.88. Amazon, on the other hand, is up 28.1% since that same date.
While some are picking up WMT shares at a "discount," Money Morning Chief Investment Strategist Keith Fitz-Gerald thinks Walmart should be avoided.
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With so many superior stocks out there, why mess around with one that still languishes in a bear market? In fact, Fitz-Gerald thinks Amazon is still the best investment theme out there and has five ways to ride its coattails all the way to the bank.
Here they are...
Ways to Profit Now, No. 5: Go with the Leader
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If you can't beat 'em, join 'em. There is no better way to profit from Amazon stock than owning it. Amazon is the leader. The king. And just the thought that it is entering a new market sends that market's stocks tumbling.
Amazon can breathe life into staid businesses and start-ups alike. Its marketing muscle can resurrect brands, like Whole Foods, and send them back into profitability. And the competition gets left in the dust. Just ask meal-kit maker Blue Apron Inc. (Nasdaq: APRN) what happened to it after the Whole Foods deal.
But Amazon is not just a retailer. It's a dominant force in cloud computing. It's a streaming leader. It's creating its own programming. And it is second place in the race to a market valuation of $1 trillion. Yes, that's trillion with a "t."
Ways to Profit Now, No. 4: Buy Alibaba Shares
The next idea is buying Alibaba Group Holding Ltd. (NYSE: BABA), sometimes known as the Amazon of China.
Roughly 80% of China's online shopping takes place on one of Alibaba's sites. That's a really big deal because China represents the world's largest e-commerce market, with 2017 retail web sales of approximately $1.15 trillion. That's more than double U.S. e-commerce figures that were $455 billion in 2017.
U.S. shares trade in the area of $189.41.
Ways to Profit Now, No. 3: Place a Call on BABA
Another way to profit from Alibaba is by buying long-term equity anticipation security (LEAP) options on the stock. Options in general let investors participate in an underlying stock's gains but at a much lower cost. And the risk is limited to the initial investment, which is much smaller than buying the stock outright.
This is leverage. If the stock goes up, the options will return even bigger and faster gains. That would allow you to hold more of the stock for less money. Currently, the longest-dated options (in the money) are BABA Jan. 17, 2020 $190 Call (BABA201217C00190000), priced at 32.74 this week.
Ways to Profit Now, No. 2: Buy Shares of Shopify
The fourth idea is buying Shopify Inc. (NYSE: SHOP) stock. The company is intimately involved in setting up e-commerce websites with a cloud-based, multi-channel commerce platform for small- and medium-sized businesses in Canada, the United States, the United Kingdom, Australia, and other parts of the world.
In 2017, the company announced that it powers over 500,000 businesses in 175 countries - helping to service everyone from entrepreneurs to students.
Fitz-Gerald thinks the stock can stand on its own merits, but the kicker is that it could be a juicy target for Amazon's next acquisition.
Trading at $168.22 this week, the stock does look to be a good buy-the-dip candidate.
Ways to Profit Now, No. 1: Place a Call on Shopify
Finally, the alternative to buying Shopify outright is to buy LEAPs. The longest available right now with any volume is the SHOP Jan. 17, 2020 $165 Call (SHOP201217C00650000). For $42.40 each, it allows the investor to leverage up for even bigger profits.
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Forty-six years ago, Congress passed an obscure piece of legislation known as Public Law 92-313. And today, it's why the Treasury is sitting on top of an $11.1 billion pile of money.
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Because this cash is getting scooped up left and right! Read more...