Between the congressional investigation into antitrust laws violations and the latest reports of price gouging ahead of Hurricane Irma, it's no surprise that some of the media pundits are shorting Amazon.com Inc. (Nasdaq: AMZN).
Now that's certainly one way to play this juggernaut…
But it's definitely not the smartest – unless, of course, you're OK with losing all of your money.
Instead, I've got a strategy you can use that offers unlimited profit potential.
And it's on a retailer that's virtually Amazon-proof…
How Home Depot's "BOPIS" Model Puts You in Position to Make Unlimited Cash
Two months ago, on July 20, Amazon announced it was going to start selling Sears Kenmore branded appliances online, including a line of smart appliances that can be voice-controlled by Amazon's Alexa. Naturally this had a negative impact on many of the brick-and-mortar stores, like Whirlpool Corp. (NYSE: WHR), Best Buy Co. Inc. (Nasdaq: BBY), and Lowe's Cos. Inc. (NYSE: LOW), which all fell a significant percentage in share price that day.
But one store, Home Depot Inc. (NYSE: HD), has rallied higher to over $155 per share ever since falling 4% that day. And this one won't be "Amazon'ed," like the others.
In just the first quarter, HD's online sales rose 23% year over year, and it continues to report strong growth (coming in at +5.5%, +5.8%, and +5.5% again over recent quarters), gross margin preservation, expansion of operating margins, and double-digit earnings per share growth. It's also produced an impressive more than 10% earnings growth rate over the last five years (sourced by InvestorPlace).
And it's all thanks to its "Buy Online, Pick Up in Stores (BOPIS)" model. In fact, about 25% of HD's $3.76 billion in total website sales (almost $1 billion) came from its BOPIS program, according to the Internet Retailer's Report.
Now, I come from a Home Depot background, having worked there in my previous retail life, and it can fulfill many of its orders from local stores – so its delivery is actually much quicker than AMZN's. But the real catalyst behind its successful model is that people like to buy its home repair items, like paint, flooring, tools, and fixtures, in person. They want to be able to take the time to inspect, feel, and gauge everything they're going to buy instead of ordering online.
After all, it's hard to make a big home improvement purchase without actually seeing it for yourself first – and HD gets that. For that reason, the largest home improvement chain in the United States is doing, and will continue to do, very well.
Now, some of the pundits might say that AMZN should still be a concern for the likes of HD, but I just don't see it as substantial an adverse effect as they want us to believe. HD has been strong – despite what AMZN has done. And even with Amazon's multibillion-dollar Whole Foods deal shaking up retailers' share prices again, HD continues to stay relatively strong and bounce back.
Just take a look at its price chart…
About the Author
Tom Gentile is one of the world's foremost authorities on stock, futures and options trading.
With more than 25 years' experience trading stocks, futures, and options, Tom's style of trading systems and strategies are designed to help individual investors propel themselves past 99 percent of the trading crowd.