Amazon.com, Inc. (AMZN)

As a replacement for 30% of bonds and RIFs for retirees? Doesn’t think this is the right fit for a RIF or as a replacement for bonds. It doesn’t pay a dividend. It will be significantly more volatile than quality bonds will. He doesn’t own this because it doesn’t pay a dividend.

A very important company and very attractively valued. It isn’t just that they have the dominant position in internet retail and a powerful brand, it is also that they own a lot of the technology that facilitates this. A low-cost producer. What a lot of people miss is that their accounting is very conservative. Their free cash flow is between 4% and 5%, very similar to the market. However, it can be volatile. Every 18-24 months there appears to be a 20% pullback. That would make the easiest entry point.

The longer-term trend for this is distinctly on the upside. The problem is that, like most of the FANG stocks, it is starting to struggle now. That is not unusual, because they have had such a huge run. Technically, it is in an upward trend, but is overbought and is starting to show some early signs of rolling over. From a trading point of view, you want to take some money off the table. Seasonally, this has done best from late October through until January.

Broadcom (AVGO-Q), Nvidia (NVDA-Q) or Amazon (AMZN-Q) for a long-term hold? He likes all of them. They are all very interesting companies. We all know the story of Amazon, and Nvidia is on fire with their new graphic chips. Broadcom has been doing a great job of consolidating the traditional computer chip industry. This one would be in the middle of the risk curve. You are paying a big price for it, but growth is pretty certain and the outlook is long-term.

Seasonality for technology stocks usually starts on October 10. This just came out with earnings and the stock pulled back a little. We are starting to see some weakness overall in tech stocks. This could actually pull back to $875 if there is some weakness in the market and the technology sector.

AMZN-Q vs. QQQ-Q. You can buy very few AMZN-Q shares if you want. There are huge earnings coming in from the technology sector and they report next week. The QQQ-Q’s seasonality reaches its peak on July 17^th (today). These stocks are overbought right now. The stocks are starting to struggle. We have already seen the peak in QQQ-Q.

Long-term hold? P/E ratio 180, which really takes you back. However, if you adjust the accounting Net Income to strip out the non-cash items, the cash P/E ratio is in the high 20s-30s. If looking to hold this for at least 3 years, it is a tremendous company.

This has been a fantastic story, and is one of the stocks that he has regrets not buying. It has a very rich valuation and is growing very quickly, with a fair amount of volatility. Probably not one he would buy, but he does recognize its quality.

A lot of people look on this as a tech name, but technically it is a consumer name. Trading at 66X forward earnings with a very strong growth rate of over 30%. However, that is at a 2X PEG ratio, a bit more expensive than some of your other high flyer type of names in that space. The market has looked at their acquisition of Whole Foods as very positive, but we’ll have to wait and see if they can execute this well. Other names that are more attractive, and with less risk.

Chart shows an upward trend line. Recently momentum has been coming out of the stock, and the stock has bumped up against a line of resistance. It has the appearance of a rising wedge, which is typically a bearish set up if it ever breaks below the lower limit. The lower limit comes in at around $950, and if it breaks through that, there could be a substantial retracement of the move that has taken place over the past 3 years or so. Be careful of that. We are approaching the period of seasonal strength from September all the way through to the end of the year. He would stay away from this right now.

This company has unrivaled retail assets. Also, with their AWS Computing subsidiary, they have low cost computing and have everything they need to compete in the retail world. Thinks their revenues are going to continue to grow at 15%-20% and earnings will be compounding at 15% over the next several years. His target price is $1150 in 12 months. With their big acquisition of Whole Foods, they just tapped into the biggest retail market. (Analysts’ price target is $1100.)

It was just announced they are acquiring Whole Foods (WFM-Q) for about $14 billion. This is a huge disruption for the grocery business, more so initially in the US where they are situated across the country. You can now expect Whole Foods to build out across Canada. Food is the least area penetrated right now in online ordering.

This is going to be very volatile, but it is going to keep going. A big player in retail. Their AWS division is growing rapidly and they are world leaders at that. The move into Cloud is still in its early stage. They haven’t begun to really monetize their ability to be able to advertise directly to the consumer. They haven’t moved into medicine and drug dispensary yet, and he would be surprised if they don’t. Amazon Prime is going to continue to grow. As people move more and more towards online and automatic replenishment shopping, their delivery process is going to get more robust. As that happens, their costs for delivery goes down. Buy this on dips.

There is an oligopoly forming up in Cloud services business with Google (GOOGL-Q), Microsoft (MSFT-Q) and Amazon. He likes what is happening. Amazon recently put up a quarter which was a 6%-8% beat. The company is in the right space and doing the right things, but valuation is really stretched. He would like this to have a little bit of time for consolidation.

He would be more of a buyer than a seller on this. They don’t make any money, but the revenue stream is so powerful that at any point in time they could just say we are going to make a lot of money, because the margins are pretty good.