Seriously, when will people stop buying the Amazon.com, Inc. (NASDAQ:AMZN) hype?
In it’s earnings call for last quarter, online retailer Amazon.com, Inc. (NASDAQ:AMZN) reported a lower profit margin, a lower net income and indicated that it anticipates next quarter’s net to run somewhere between $10 million and a loss of $340 million. Of course shares jumped 2.2%.
Really, the hypnosis-like hold Amazon has on investors is a mystery to me. Sure, last quarter’s revenue grew by 22%, but without profits how the heck is revenue supposed to matter? It’s the classic case of it not mattering how much you bring in if you’re spending more than you make. That’s where I see Amazon.com, Inc. (NASDAQ:AMZN)–a company that’s continually convincing investors that it’s great because it has all of these big plans. But the plans never seem to pay off.
Since mid-2008 Amazon’s average quarterly profit margin has been about 2.3%. That’s not anything that should be leading to a growth in share value. Heck, the trend is worse than that figure.
Since mid-2011, the average quarterly profit has been 0.4%! Kudos for turning a profit, but really, I think a kid’s lemonade stand does better. There is simply no reason – other than irrational exuberance – for shares of Amazon.com, Inc. (NASDAQ:AMZN) to have gained 239.7% over the last 60 months.
Better places, other spaces
Like I said, there’s no visible reason for Amazon.com, Inc. (NASDAQ:AMZN) to be trading in the upper $200 region. There are much better investments, both in tech and other sectors, that should interest your investment dollars. Here are four that I think are more deserving of investors’ interest and faith.
Chevron Corporation (NYSE:CVX) is a prime contender for a long-term, reliably profitable investment. It’s 2012 net margin was approximately 10.9% – more than Amazon’s combined profit for the last two years – and its last quarter’s profit was higher.
The company pays a very good dividend with a yield of 3% and – since the bottom in early 2009 – the company’s shares have increased in value by about 103.4%. There’s no reason to assume that won’t continue as demand for oil and oil-based products continues to grow in the developing world. Chevron Corporation (NYSE:CVX) is a company that is earning its share-value increase with performance, not promises that no one knows whether they’ll ever come true.
GlaxoSmithKline plc (ADR) (NYSE:GSK) in the pharma sector is another stock that Amazon.com, Inc. (NASDAQ:AMZN)’s investors should be paying attention to. The company has been profitable for a long time and appears capable of continuing that trend.