Account Information

  • My Account

    Manage all your subscriptions, update your address, email preferences and change your password.

  • Help Center

    Get answers to common service questions, ask the analyst or contact our customer service department.

  • My Stock Talk Profile

    Update your stock talk name and/or picture.


Renowned Economist Paints Startling Portrait of the Future

Renowned Economist Paints Startling Portrait of the FutureRenowned economist Dr. Stephen Leeb has predicted the last 5 major market shifts. And he’s just revealed his latest prediction: “A market meltdown will wipe out the savings of millions of Americans.” In his latest report, he details which stocks will come crashing down in the coming months, as well as a select few that could double or even triple in value over the next few years. Get your copy here.


Will the Real King of the Internet Please Stand Up (and how to profit when he comes to town)

By Linda McDonough on September 6, 2017

Moody’s recently released a radical report disputing Amazon’s crown as the King of e-Commerce. Analyst Charlie O’Shea, Moody’s vice president, and lead retail analyst warned that investors are putting too much clout into Amazon’s recent purchase of Whole Foods. He believes “the online giant is still a long distance from ruling retail.”

He views Amazon as one of the weaker retail players based on its operating results and believes estimated Prime membership counts are inflated. His message is that Amazon’s weight is not enough to crimp profits in the food industry.

The synopsis included on Moody’s website includes this quote from O’Shea,

“”Many see Amazon’s purchase of Whole Foods as further evidence that the online giant is dominating US retail, and the company is likely to remain the preeminent player in online shopping,” said Moody’s Vice President Charlie O’Shea. “But online sales still account for only about 10% of overall US retail sales, with a much lower percentage in the grocery segment, leaving the big brick and mortar retailers, led by Walmart, still really formidable competitors in the industry.”

As a contrarian, I love hearing the dark side of a trade, but in this case, I think Mr. O’Shea is missing the point.

The primary reason that companies fear Amazon encroaching on their territory is Amazon’s willingness to trade profitability for revenue growth. It is entirely likely that Amazon’s e-commerce operation has less robust profits than those of its brick and mortar brethren but therein lies the problem.

It can be economic suicide to go up against an irrational competitor. Most of the time, a competitor cutting prices willy-nilly will eventually go bankrupt, but in this case, Amazon is producing oodles of cash, allowing it to continue cutting prices.

This is partly due to its highly profitable web services division. Amazon doesn’t break out its e-commerce operating results from this business, known as AWS. AWS provides web hosting services to a plethora of customers. Speculation is that this is an incredibly profitable business that accounts for the majority of Amazon’s profits.

As a public company, Amazon started training analysts early on that it was perfectly willing to sacrifice profits for revenue growth. When Amazon went public in 1997, it had a three-year head start before the crash arrived.

That meant it had at least twelve quarters as a public company to set expectations that any investor willing to buy its stock had better be prepared for future losses. Mary Meeker, then deemed Queen of the Internet and lead analyst at Morgan Stanley, was one of the first to highlight how critical this “land grab” would be for any retailer hoping to be successful in the world of e-commerce.

Each and every quarter, Amazon would report dizzying revenue growth and big losses. It’s quite astounding to realize that Amazon’s revenue has grown from $147 million in the year of its IPO to almost $150 billion, or one thousand times in twenty years.

In that time span, profits have crept in. Although O’Shea is correct that Amazon’s overall profit margin of 2% is lower than that of most brick and mortar retailers, that point is moot. Amazon is well muscled to beat up its competitors in the grocery aisle.

Grocery sales, in general, have been in a downward spiral as consumers prepare fewer meals at home. Although stores have been offering much more in the way of prepared foods to entice customers, these profits aren’t enough to compensate for lost sales. The profits generated by these offerings pale in comparison to the hefty ones delivered by packaged foods whose sales are dwindling.

To say that online shopping makes up less than 10% of food purchases misses the point. When sales are growing, a new ruthless competitor might take a small bite off a company’s growth rate. However, in an industry where too many companies are fighting for shrinking sales, a new entrant willing to slash prices will take a painful chunk of flesh out of profits.

In my Profit Catalyst Alert service, I’ve recommended some very successful bearish bets on stocks all along the food chain. Many delivered high double-digit to triple digit gains. I’m looking for more as I believe the food fight is just revving up with Amazon’s purchase of Whole Foods.

You might also enjoy…


Here’s What’s Really Going to Crush the Market

Most folks understand the basic concept of inflation… things cost more money. But tragically, most don’t understand the real implications of what it means for their financial future. 

Or just how dangerous it’s becoming right now. Today.

And there are two reasons for that…

First, the U.S. government’s calculations barely take into account two of the things you and I are paying more and more for every day: energy and food.

Second, since inflation really hasn’t been an issue for the past 30 years here in the U.S., most analysts won’t dare to say it’s on the rise because they’ll suffer professionally. 

But I’ve made a name for myself by always saying what needs to be said. Which is why I’ve prepared a new special report that’ll give you simple instructions on how to protect yourself from the coming storm.

And better still…

It gives you the full story on the six types of investments that are destined to soar 275%… 375%… even up to 575% over the next few years as the winds of inflation flatten the U.S. economy.

You can get your free copy here.

Stock Talk — Post a comment Comment Guidelines

Our Stock Talk section is reserved for productive dialogue pertaining to the content and portfolio recommendations of this service. We reserve the right to remove any comments we feel do not benefit other readers. If you have a general investment comment not related to this article, please post to our Stock Talk page. If you have a personal question about your subscription or need technical help, please contact our customer service team. And if you have any success stories to share with our analysts, they’re always happy to hear them. Note that we may use your kind words in our promotional materials. Thank you.

You must be logged in to post to Stock Talk OR create an account.

Create a new Investing Daily account

  • - OR -

* Investing Daily will use any information you provide in a manner consistent with our Privacy Policy. Your email address is used for account verification and will remain private.