Thursday, 3 August 2017

Finance: These 4 companies look Amazon-proof

Believe it or not, some companies might actually be able to withstand the Amazon juggernaut.

Amazon has every retailer in the US on notice, but RBC Capital Markets has identified four companies that look poised to withstand the pressure.

Amazon has every single retailer in the US on notice.

The Jeff Bezos-led juggernaut is armed with a war chest of cash and it hasn't been shy about throwing its weight around in the past couple months, disrupting every industry in sight.

Its $13.7 billion acquisition of Whole Foods threw the whole grocery industry into disarray, while Blue Apron's battered IPO price ended up as collateral damage. Its newly-announced partnership with Nike sent the likes of Dick's Sporting Goods and Under Armour tumbling. Heck, even the payments industry is facing a major, Amazon-led shake-up.

But there are still a few bright spots, says RBC Capital Markets — companies whose existing business models have created a natural insulation from Amazon, as well as those that have been quick to adapt.

Here are four such corporations highlighted by RBC in a recent client note:


Ticker: KMX

Total return year-to-date: 2.8%

Rationale: "We believe KMX provides true scarcity value with solid comp momentum and a business model that will be difficult for Amazon or others to disintermediate."

Source: RBC Capital Markets


Ticker: WMT

Total return year-to-date: 17%

Rationale: "We believe Walmart will ultimately be one of the best positioned retailers over the long-term due to its existing size, scale and technological improvements."

Source: RBC Capital Markets

Best Buy

Ticker: BBY

Total return year-to-date: 40%

Rationale: "Best Buy has already weathered the worst of the 'Amazon storm' through price matching and substantial in-store/online improvements, and has now been steadily gaining market share ... Best Buy has fought back against Amazon better than most."

Source: RBC Capital Markets

Dollar General

Ticker: DG

Total return year-to-date: 1.1%

Rationale: "While competitive concerns will likely remain an overhang, the stock is fairly inexpensive and, in our view, the Amazon threat seems very modest."

Source: RBC Capital Markets


It's about to get a lot easier to bet on the backbone of the stock market

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