AMZN) reported their third quarter earnings last month the stock spiked as the company beat Wall Street expectations on revenue. It was just the latest in a series of moves higher that together have the stock up more than 40% in 2013. So is it time to take your profits and buy some Christmas presents on Amazon with them? Maybe in the short-term says the co-founder of Bespoke, Paul Hickey.
“It’s a volatile stock,” he notes, adding “it’s had a 25% rally almost in the last several weeks, so if it pulls back 15% you may be kicking yourself.”
Still, Hickey doesn’t believe the company is overvalued and the future continues to look bright. “Last week we saw weak earnings from traditional retailers, Amazon rallied on the news. It’s taking share from brick and mortar retailers, not only electronics like Best Buy (BBY)...you’re gonna see Amazon slowly taking share from general merchandisers like Walmart (WMT) and Kohls (KSS).”
Hickey thinks Amazon’s offer to deliver goods seven days a week is a key to their journey toward retail supremacy, especially as the holidays draw closer. But for the company as a whole, it’s become about much more than getting that DVD to your front door faster.
“When you have their web services business, you have their media business, their proprietary content coming out, those are all potential drivers for the stock,” Hickey says. “It’s valuation is high, understandably so, but it’s been that way for several years now.”
However, with the stock up so much in a relatively short period of time, Hickey reminds investors that now might be a good time to at least hedge a portion of your interest in Amazon.
“Retailers traditionally peak right around Thanksgiving. So even though December’s a good time for revenues, for the stocks it’s not very good,” Hickey points out. “Anytime you see a big move over a short period of time, it’s only common nature to become a little more cautious on the stock. It’s gotta at least see some sideways trading here.”
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