Mr Miller just downgraded HGG. His astute analysis indicates that AMZN sells things cheaper than HGG. Wow that's earth shattering news. If you follow his reasoning all brock and mortar stores will close and AMZN will be the sole source of products for earth. I'm not buying a washer and dryer on AMZN. It's great for books and impulse items buy when it comes to high end products most people want to see it in person first. HGG will still meet AMZN prices if you ask.
Now lots of people on this board comain that HGG is expanding, opening new stores etc; isn't this a great time to expand?? Leases are cheap, labor is cheap and they are using Zero debt to expand. The shares are dirt cheap relative to revenue growth. If revenue grows by only the amount of new stores (20%) and remains flat otherwise, margins remain flat at 2.3% (same as bby) although margins will increase somewhat without any other changes since all debt has been retired.... If the market values retail at a modest 18% P/E instead of the current 8.... in 5 years you are looking at a 60$ stock. All of the anylists will yell strong buy after the horse is out of the barn. This is an out of favor sector in a weak economy. Other than bank stocks, retail will lead the recovery. this is a well run company with a great balance sheet.
Their -11% comps were way worse than BBY or LOW or HD or even the lowly SHLD. The lack of organic growth, particularly from Stores that should still be ramping up in volume, has to be a big concern.
His reason for the downgrade may be flawed. But his downgrade is not flawed.
Unemployment is increasing. Therefore, consumers will not be buying at hgg or anywhere else like they were. Instead of seeing hgg sales increase, you will see them stagnate or decline in the near future. I do not believe you will see hgg go bankrupt in the near future if at all. However, because of poor and deteriorating economic conditions, it is unlikely that you will see this stock increase in value. Most likely it will either stall at around $12.50 or go to $11.
so it will stay at 11 forever? when will it rebound? nobody knows. when the economy does rebound it will go very quickly. all that money that got printed is going to get spent. I think we are saying the same thing. the economy sucks. it won't suck forever. I could be one of the genius investors buying linked in at 1100 x earnings.
"His astute analysis indicates that AMZN sells things cheaper than HGG."
And the same held true a week ago and a month ago, when the analyst rated the stock an outperform. Those analysts are a bright bunch!
Amazon has no inventory to worry about, no Labor Cost to worry about, no incremental marketing costs to worry about, and they do not pay sales tax in 43 States. If a retailer cannot provide 'added value' to Amazon, and do it profitably, they be toast.