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Four Reasons to Read Amazon as Opportunity


The company is the future of books, electronics, and online shopping.

Maybe it was because I stayed up way past my bedtime this past Friday for Festivus, or the early-morning bike ride I took today, or both. But in any case, I'm wiped out. Is it Friday yet?

Asian stocks took a hit overnight. The Hang Seng and the Nikkei were off 1.18% and 0.27%, respectively. European stocks, however, were mixed earlier this morning. And here in the US, we're currently trading lower.

Here's what I'm seeing this morning:

Amazon (AMZN):
The online retailer took a bit of a beating in Monday's session, dropping more than $3. Hardly a horrific drop for this company, but I did want to point it out because I had some folks asking me yesterday whether I saw it as opportunity knocking.

1. When I think of Amazon right now, I think of it as the future of books. Some aren't reading traditional books anymore -- they're looking at electronic devices. This plays to its Kindle. That said, a good number of old-school people who prefer a traditional read, also prefer to shop online. Again, playing right into the company's hands.

2. It's also giving many of the other bigger chains fits when it comes to electronics.

3. Let's not forget that it's the holiday season and Bezos and his posse are going to be making a big push for your dollars, online traffic, and press headlines.

4. I consider the company a potential trading opportunity. But I'm reluctant to jump in with force because I think the market has come too far too fast, and that a pullback is in order. I also see the macroeconomic road as being one that's going to have some potholes. And finally, I think it trades at too high a price to expected earnings multiple.

The company that needs no introduction was out with its November comp numbers. Its global comps were up 0.7%. Up is good, but some may get in a twist about its performance in the US. Comps in America were down 0.6%, which isn't too tasty.

My feel:

1. While the stock has had a nice run, and it may not have the same shine as it did in the mid $50s, it could still have some legs. Things might not be too swell in early trading, but I continue to like the company. It's the Walmart of the fast-food business, and its international presence is huge as is its potential for growth outside of the US. That piques my interest.

2. I'd look at weakness as an opportunity to take a little bite.
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No positions in stocks mentioned.

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