Stock prices make for a desolate autumn 2008. That is in general terms. There are stocks which become ever better buys as prices head South.
Take Amazon.com for example. The October 2008 has fallen below half of the 52-week high. The Beta is 2.27. The management has cut guidance. What should stock investors do? Here are my five top reasons to recommend that you buy Amazon.com
1. The web-site is a winner. Take a look for yourself. You will find it hard to stop browsing. It is a Web 2.0 model with plenty of opportunities to express opinions. You could hardly ask for a better place to browse through books and shop for music.
2. The brand is entrenched rock-solid. Ask folks of all kinds. Amazon.com has an amazing top-of-the-mind recall percentage. It is the web site of choice for browsers all over the world. The share in the United States is remarkable.
3. The cost-structure of Amazon.com beats the book-shop format. The entire Retail (Specialty) Industry has suffered drastic Gross Margin reductions. However, Amazon.com has held on to its five-year record for this vital parameter through the looming recession. No one else is as protected against a negative economic cycle.
4. Amazon.com remains best-poised to leverage a demand upturn. It can add a nearly endless array of products and services to its present platter of books and music. It could be something as mundane as flowers, or a high-value item such as jewellery and handicrafts. I wish the management would diversify sidewards faster though.
5. Liquidity is not an issue with Amazon.com. The Quick Ratio stays below 1. Long-term Debt is less than a fifth of Equity. The Interest Coverage is over 70. Reputed institutions hold most of the stock. You can hardly do better.
Amazon.com is an example, but it is not unique. You can use your disposable cash to build a stock portfolio of extraordinary value during the current market phase. Start right away before others begin to push stock prices northwards.
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