For today’s bulletin, we take a look at the Amazon.com $AMZN feeding frenzy on the last day to submit incentive packages to the firm as they seek to select a location for their new, second headquarters. We also provide a link to download a FREE STOCK REPORT on the company.
VALUATION WATCH: Overvalued stocks now make up 60.95% of our stocks assigned a valuation and 26.31% of those equities are calculated to be overvalued by 20% or more. Fourteen sectors are calculated to be overvalued. Because overvaluation is now calculated to be above 60%, we have re-instituted our valuation watch.
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Amazon.com, Inc. (AMZN) seeks to be the world’s most customer-centric company, where customers can find and discover anything they may want to buy online. The company lists unique items in categories such as books, music, DVDs, videos, consumer electronics, toys, camera and photo items, software, computer and video games, tools and hardware, lawn and patio items, kitchen products, and wireless products.
We have been hitting retail hard of late in our bulletins and long-time readers know that driving so much of the “creative destruction” in the sector is the elephant on the internet, Amazon.com. Amazon’s online sales are changing the sector and destroying brick and mortar businesses unable to keep up. We have repeated this story time and time again as we cover failing mainstays from the past such as Sears, K-Mart, JCPenney, Macy’s, etc.
Now, we see competition of a different sort as cities across the US compete to land Amazon’s new second headquarters in their jurisdictions. On the table are billions in future taxes and an estimated 50,000 jobs. This is the sort of project that can transform a town or city, and thus we were not surprised to see that more than 100 US cities have taken the time and effort to submit incentive packages to Amazon officials.
Amazon’s demands were modest–at least up front–and many places would seem to meet them:
- metropolitan areas with more than one million people
- a stable and business-friendly environment
- close proximity to an international airport and major roads
- access to mass transit
- urban or suburban locations with the potential to attract and retain strong technical talent
- communities that think big and creatively when considering locations and real estate options
Of course, that’s a sensible list. But what this will really come down to is which state and municipality is willing to sweeten the deal with land giveaways, tax credits, and other incentives. We have seen states go to ridiculous lengths to attract these sorts of facilities lately–hello Wisconsin and FOXCONN with a $3 BILLION package!
Most of the media coverage has focused on quaint videos or other attempts by smaller cities to garner attention. We don’t expect these sorts of packages to be successful. Our money is on a place like Austin–or, if the company really wants to pick a city with great potential and real value, Philadelphia. However, we wouldn’t be surprised if the company took a “safer” pick like Atlanta, Denver, or Dallas.
ValuEngine continues its HOLD recommendation on Amazon.com, Inc. for 2017-10-18. Based on the information we have gathered and our resulting research, we feel that Amazon.com, Inc. has the probability to ROUGHLY MATCH average market performance for the next year. The company exhibits ATTRACTIVE Company Size but UNATTRACTIVE Book Market Ratio.
You can download a free copy of detailed report on Amazon.com, Inc. (AMZN) from the link below.
| ValuEngine Forecast | ||
| Target Price* |
Expected Return |
|
|---|---|---|
| 1-Month | 994.75 | -0.23% |
| 3-Month | 1,019.27 | 2.23% |
| 6-Month | 1,050.39 | 5.36% |
| 1-Year | 970.04 | -2.70% |
| 2-Year | 1,137.03 | 14.05% |
| 3-Year | 1,134.82 | 13.82% |
| Valuation & Rankings | |||
| Valuation | 43.66% overvalued | Valuation Rank(?) | 9 |
| 1-M Forecast Return | -0.23% | 1-M Forecast Return Rank | 34 |
| 12-M Return | 21.93% | Momentum Rank(?) | 64 |
| Sharpe Ratio | 1.04 | Sharpe Ratio Rank(?) | 91 |
| 5-Y Avg Annual Return | 26.59% | 5-Y Avg Annual Rtn Rank | 92 |
| Volatility | 25.64% | Volatility Rank(?) | 59 |
| Expected EPS Growth | 49.12% | EPS Growth Rank(?) | 73 |
| Market Cap (billions) | 461.62 | Size Rank | 100 |
| Trailing P/E Ratio | 293.23 | Trailing P/E Rank(?) | 31 |
| Forward P/E Ratio | 196.65 | Forward P/E Ratio Rank | 2 |
| PEG Ratio | 5.97 | PEG Ratio Rank | 6 |
| Price/Sales | 3.07 | Price/Sales Rank(?) | 36 |
| Market/Book | 24.35 | Market/Book Rank(?) | 7 |
| Beta | 1.45 | Beta Rank | 21 |
| Alpha | -0.08 | Alpha Rank | 36 |
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