Opinions
Hilary Kramer
Amazon.com, Inc.
AMZN-Q
TOP PICK
Oct 14, 2016
Stock price when the opinion was issued
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Loves the name longer term, but sold a month back. Disappointing when you pick a stock that's the belle of the ball until the Trump wrecking ball comes along. Growing ~19%, trading at 23x. Not expensive. Analysts are assuming clarity; if we don't get it, estimates will fall.
Be careful. Never forget that lots of people have made stunning amounts of money for a long period of time. These stocks don't owe you anything. If you're going to buy, do it incrementally.
The consumer-related companies are taking it on the chin, so AMZN's retail side is taking a hit. Cloud business is great. Imports all its goods, and can more easily switch to importing from countries other than China. He's not buying much of anything now, but if he were, he'd probably pick this one.
No matter what happens with tariffs, when you think about retail there are no companies more dominant than AMZN, COST and WMT. AMZN is by far at the biggest discount to peers. Also, leading cloud computing in AWS with stable and expanding margins. Best diversification of cashflow.
Whatever the retail environment looks like, they'll win. No dividend.
Have to compete with shipping to the closest store. Unionization threat. E-commerce has pretty slim margins. AWS cloud computing growth isn't what it once was 5-10 years ago -- law of diminishing returns. He likes companies that take care of their staff and customers, and this isn't one of them. Dividend not great. Tariffs will bring lots of volatility to the Mag 7. More of a trade. Not for retirees.
He owns MSFT.
Growth will be in the cloud computing division and advertising. E-commerce is under-penetrated in overall society, still under 20%. He views this as a logistics business, and it's the best. Prime is awesome, and they've won that game.
Over time, will eke out more profitability. One of his favourite Mag 7 stocks.
At the time it was cheap on PEG basis, AI play with AWS, growing into all its capital expenditures, economy was looking good. Then tariffs. Now there are headwinds, and it put out softer guidance. Still sees 19% growth, trades at 23x PE. PEG is really not bad for one of the world's best companies. Can probably get it ~$190. Still a winner, more to go.
They have their eye on it and you could buy with a very long term time horizon. However he would wait for a pullback. It has several different businesses, some with very high margins and some with low margins. It is more in the fulfillment business than product selling business by charging a fee for sellers. It shouldn't be hit by tariffs but sellers might. It is not cheap but has an excellent management team along with growth and innovation.
$300 billion-dollar market cap. You could buy Amazon, hold Amazon and keep Amazon, as there is nothing to say that it won’t be a $1 trillion company someday. This has become the de facto future. The company was brilliant. Quarter after quarter after quarter, people sold off the stock because they thought the company was wasting money on building warehouses all over the world. However, it allowed the company to become the one and only option for Internet-based commerce. They are also in the Cloud business as well as having Echo, a smart speaker for answering questions and controlling an intelligent home.