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5 Companies That Are Immune to Amazon's Endless Expansion
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For long-time investors in technology, it surely has been remarkable to watch one company’s massive growth and expansion. Amazon.com Inc. (NASDAQ: AMZN) emerging as a worldwide leader in everything from retail to cloud computing, and now what may be high-end grocery shopping and even delivery with the purchase of Whole Foods, has truly been stunning. Early on the Amazon story was discounted as skeptics never believed that the internet would rule everything. How wrong they were.
Needless to say, the Amazon push into everything is leaving some companies vulnerable. Certain brick-and mortar-retailers, not the least of which are in the grocery arena, top brand name products and other companies could all feel the pressure from the Amazon behemoth.
In a recent Jefferies report, the analysts present a list of Amazon-resistant stocks, and here we feature five from the list that make good sense for investors regardless of what the future plans are from Amazon.
Baby boomers love to cruise, and this is one of the sector leaders. Carnival Corp. (NYSE: CCL) operates as a leisure travel and cruise company in North America, Europe, Australia and Asia. It offers cruises under the Carnival Cruise Line, Princess Cruises, Holland America Line and Seabourn brands in North America, as well as the Costa, AIDA, P&O Cruises (UK), Cunard and P&O Cruises (Australia) brands in Europe, Australia and Asia.
The company operates 99 cruise ships. It also owns Holland America Princess Alaska Tours, a tour company in Alaska and the Canadian Yukon, which owns and operates 11 hotels or lodges, approximately 300 motor coaches and 20 glass-domed rail cars. In addition, the company is involved in the leasing of cruise ships. It sells its cruises primarily through travel agents and tour operators.
Carnival shareholders are paid a solid 2.45% dividend. The Wall Street consensus price target is $67.02, and the shares closed Thursday at $65.15 apiece.
It’s time to make the donuts, and it’s likely Amazon won’t be doing it. Dunkin’ Brands Group Inc. (NASDAQ: DNKN), whose brands include Dunkin’ Donuts and Baskin-Robbins, is nearly 100% franchised. Core markets in the United States include New England and New York, while international core markets are South Korea and Japan. Dunkin’, currently operating in over 50 countries, has significant unit growth potential both domestically and internationally, with over 20,000 global units.
The company reported adjusted earnings per share that were above consensus estimates, thanks to a tax benefit. The company’s U.S. comps were flat. Its streamlined menu will be rolled out to 800 more units this year after a positive reception by franchisees and crew. The company maintained fiscal 2017 Dunkin’ U.S. comparable guidance of low single digits and raised earnings guidance by six cents per share.
Shareholders are paid a tasty 2.36% dividend. The posted consensus price target for the shares is $55.95. The stock closed Thursday at $55.26 per share.
The fast-food giant still remains a solid pick for investors seeking dividends and a degree of safety, and it is hardly worried about an Amazon entry into fast food. McDonald’s Corp. (NYSE: MCD) is the world’s leading global foodservice retailer, with over 36,000 locations serving approximately 69 million customers in over 100 countries each day. More than 80% of McDonald’s restaurants worldwide are owned and operated by independent local business persons.
The company reported solid second-quarter results, but the U.S. store comparisons of just 1.8% were disappointing to investors. Merrill Lynch noted that charges and refranchising gains make the earnings numbers a bit dicey, so the firm lowered its estimate.
McDonald’s shareholders are paid a nice 2.45% dividend. The consensus price objective is $157.84. The shares closed most recently at $153.13.
This top chain continues to be a favorite across Wall Street as millennials and Generation X love to spend time there. Dave & Buster’s Entertainment Inc. (NASDAQ: PLAY) owns and operates entertainment and dining venues for adults and families in North America. Its venues offer a menu of “Fun American New Gourmet” entrées and appetizers, as well as a selection of non-alcoholic and alcoholic beverages and an assortment of entertainment attractions centered on playing games and watching live sports, and other televised events. As of December 6, 2016, it owned and operated 88 stores in 33 states and Canada.
Many top analysts feel the new unit growth story has an underappreciated, differentiated brand and business model with no real direct competitors. Some expect this to work to the company’s advantage as it moves later in the cycle, which along with continued focus on new, proprietary games/amusements backed by marketing, should drive growth and broad-based brand awareness to support incremental same-store sales and margin leverage on 50% to 60% flow-through. New unit growth of 10% or more has been very productive as well and is also driving the brands’ awareness.
The posted consensus price target is $78.25. The stock closed most recently at $66.52 a share.
The retail giant has traded down big recently and is offering a very solid entry point. Starbucks Corp. (NASDAQ: SBUX) operates as a roaster, marketer and retailer of specialty coffee worldwide. Its stores offer coffee and tea beverages, packaged roasted whole bean and ground coffees, single-serve and ready-to-drink coffee and tea products, juices and bottled water.
The company also licenses its trademarks through licensed stores, as well as grocery and national foodservice accounts. The company offers its products under the Starbucks, Teavana, Tazo, Seattle’s Best Coffee, Evolution Fresh, La Boulange, Ethos, Starbucks VIA, Starbucks Doubleshot, Starbucks Refreshers and Starbucks Discoveries Iced Café Favorites brand names.
Starbucks shareholders are paid a 1.7% dividend. The consensus price target on Wall Street is $66.57. The shares closed most recently at $58.36.
The odd dichotomy in the story is that some of the companies that are the most susceptible to pressure from Amazon are retailers, and some of the least are also retailers. It all lies in the products or service. Some are internet friendly, and some for sure are not.
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