Today (Tuesday), Money Morning Defense & Tech Specialist Michael A. Robinson appeared on FOX Business' "Varney & Co." to discuss whether the most interesting companies of 2013 will make for next year's best investments.
- The Most Interesting Companies of 2013
- Buy, Sell or Hold: The Smart Money is Selling Amazon.com
- Why AMZN Stock is Soaring
- Amazon.com Inc (Nasdaq: AMZN): Investors Flee on Weak Q3 Outlook
- The Bright Future for Cloud Computing is Becoming Much Clearer
- Brick-and-Mortar Retailers Moving Business Online as Foot Traffic Declines
- Barnes & Noble Sale Won't Rid the Retailer of its Woes
- Only the Strongest Retailers Will Survive in 2010 as U.S. Consumers Continue to Battle Back
- Shoppers Expected to Bounce Back After Snow Storm Wipes Out "Super Saturday"
- Buy, Sell or Hold: Amazon.com Inc. (Nasdaq: AMZN) Has Been a Boon to Investors, but Now It's Time to Take Profits
- Investment News Briefs
- Investment News Briefs
- How Sustainable is the Kindle's Early Success?
- Hot Stocks: Amazon Looks to Be a Beam of Light in Foggy Retail Picture
The only retail giant continues to make new highs, yet the company's core business is slowing, and its new "growth" businesses aren't all they are cracked up to be. And with an astronomical P/E - it's in the thousands - right now, Amazon’s massive run may be over.
Money Morning's Chief Investment Strategist Keith Fitz-Gerald joined Fox Business' "Varney & Co." Friday to talk about the value in Amazon.com. Keith explained how Amazon.com's Q3 outlook isn't a bad thing.
Keith also shared a stock that he sees outperforming in this economy, and talked about how the GDP numbers highlight the "mess" Washington has created for the U.S. economy.
Watch this accompanying video for Keith's full analysis.
Analysts forecast a sharp increase in revenue, estimating earnings per share of two cents on revenue of $12.92 billion. Sales were up 29%., but net income fell 96% from the same period a year ago.
Weighing on its bottom line was investments in new distribution facilities, a number closely watched because Amazon has a history of reporting strong revenue. The company has been plowing copious amounts of its earnings into building a distribution network to help it more efficiently grow its business long term.
After reporting better-than-expected first-quarter numbers, 41 cents on revenue of $9.91 billion, the Seattle, WA.-based company had expected revenue to fall in the range of $11.9 billion and $13.3 billion.
Pushing the stock down as much as 7% in after-hours trading was the Q3 guidance.
Amazon.com predicted a Q3 operating loss of between $50 million and $350 million, versus Wall Street estimates of income of $119.6 million. Amazon said it expects Q3 revenue of $12.9 to $14.3 billion, which includes the Wall Street estimate of $14.1 billion.
Microsoft Corp. (Nasdaq: MSFT), Hewlett-Packard Co. (NYSE: HPQ), Oracle Corp. (Nasdaq: ORCL), Google Inc. (Nasdaq: GOOG), and Amazon.com Inc. (Nasdaq: AMZN) - the biggest names in the tech sector - are all racing to take the lead in this burgeoning industry.
So what's all of the excitement about?
Overall sales this August were up only slightly from last year, failing to give stores the boost they needed after a sluggish summer.
A report from MasterCard's SpendingPulse released yesterday (Wednesday) showed that consumers gave a slight bump to children's clothing and consumer electronics with their back-to-school shopping, but pulled back in other areas of merchandise which cut into sales gains.
But among uneven retail numbers this year exists a bright spot that has been growing for years, and is leading companies to overhaul their traditional business models: the online retail market.
"There are companies that do this because they have to and there are companies that do this because they have impatient shareholders and I'm not sure what's driving this kind of statement," Michael Norris, a senior analyst at Simba Information, told The Associated Press. "It just seems daft."
The company's board said that it believed Barnes & Noble stock was "significantly undervalued" and that it had established a special committee to review its options.
However, 2010 will be difficult for retailers as they contend with high unemployment, tight credit, and aggressive competition.
Retail sales gained 3.6% year-on-year from Nov. 1 through Dec. 24, SpendingPulse, a unit of MasterCard Advisors (NYSE: MA) said earlier this week. But an extra day between Thanksgiving and Christmas this year may have skewed the data anywhere from 2% to 4%, SpendingPulse said. Sales in the same period last year declined 2.3% as consumers reeled from the financial meltdown that occurred in the fall.
"The latest holiday shopping season wasn't a rip-roaring success, but at least it met or slightly exceeded expectations," John Lonski, chief economist of Moody's Capital Markets Research Group (NYSE: MCO) told The Associated Press. "Consumer spending is indeed in a recovery mode, which brightens prospects for 2010."
The trade group stuck to its previous projections for a 1% drop from last year's levels, saying the weather wasn't bad enough to deter shoppers from bouncing back in the last days before Christmas.
"There are more than enough shopping days to make up any challenges due to weather in the east," Matt Rubel, chief executive officer of Collective Brands Inc. (NYSE: PSS), said in an e-mail to Bloomberg News. Kansas-based Collective Brands is the owner of the Stride Rite and Payless ShoeSource chains.
We have been front-running many very positive catalysts since I first recommended buying Amazon.com Inc. (Nasdaq: AMZN) on Feb. 5.
First, that put us ahead of the bull-market rebound in U.S. stocks that started in early March. My recommendation also predated the launch of Kindle 2, as well as stimulus measures deployed by the United States and China in April.
Just as predicted, the U.S. economic recovery has gathered momentum and Amazon has benefited greatly by offering a compelling value proposition to a cash-strapped consumer.