When
equity markets are pulverized even the best and towering are brutalized, like now. Money “rotates” from once craved growth to plodding defensive sleepers, like now. Growth lovers love growth and sleepers look gimpy lame.
However, when airborne macros are ingested into our economic turbines our equity markets are chopped into pigeon bits. That’s when the “lame” go fame. Food and utility names are overnight stars, strutting and glittering all over the red carpet. That’s the carpet that was jerked out from under fabulous growth–like Amazon. Boeing too. These world-beaters don’t get their calls returned or invited to the best parties. Again, like now.
Investors behave much like hook-ups. The stars sparkle and then the light flickers down to twenty watts and the sheen is off. Many “investors” possess the staying power of a stadium wave. “Oops–gotta go.” No kiss. No middle finger. Nothing but asses-and-elbows.
Give a stone face and a sentence fragment to that, if you have either. Recall, that we are indeed living in a relentlessly technical equity hood now. “Charts please.” We adapt and now resemble Andy Reid and his multi-color laminate sheet. You’ll see him later today.
Last year AMZN hit 2050.50. Now it’s 1640.56. That’s $410.06 cheaper. Do you think AMZN will ever trade on fundamentals again? If so, now’s you time to begin building a new AMZN fortress–slowly. Or you can wait and pay more when it’s roaring again.
More serious pain is likely in the post. Nonetheless, better hurry. Those same fair-weather fans are beginning to notice. If there is no more ugly, you’ll be too late. If there is, “scale in,” by buying down to fill your position.
Fundamentals remain in the backseat now. Soon said will again seize the profit wheel. Should you buy Amazon now? Really? We think so. Your answer’s in the charts. STOCKjAW gets technical.
Brutal days on the S&P beat.
“Ugly Days,” you say? Keep looking…
Here’s how AMZN blew through everything yesterday yo; close, 1-11-19.
Perhaps
it was Schwab Senior VP and Chief Investment Strategist, and frequent CNBC guest Liz Ann Sonders who said it. “Operating income is what I want to see.” That’s real help.
As we all seem to accept, AMZN is capable of turning on the earnings tap any time it desires. Tracking revenue is “fundamental.” Operating income both refines revenue reads, and excludes any fluctuations created by capital expenditures.
It’s all relative. Performance doesn’t rank as such until you check it by the benchmarks. Here’s AMZN’s, the NASDAQ, symbol $COMPX.
-THE METRICS WE TRACK MATTER-
Things change. We want to know how much money our companies make from the business they pursue. For that read we need to exclude one-time “charges,” or “credits” and CAPEX, along with other fluctuating elements that distort the picture we seek. This is even more important for growth stocks, like AMZN. Here’s precisely how that’s done:
First
comes revenue. Subtract the “cost of goods sold” and you have “gross profit.” Subtract “operating expenses” and you have “operating income.”
REVENUE
SUBTRACT “COST OF GOODS SOLD.”
NOW YOU HAVE “GROSS PROFIT.”
SUBTRACT “OPERATING EXPENSES.”
EQUALS “OPERATING INCOME.”
AFTER ALL THAT COMES “CAPEX”
AND ONE-TIME “CHARGES” OR COSTS,
OR CREDITS.
AND THAT’S KNOWN AS “EBITDA.”
“EBITDA,” ” EARNINGS BEFORE INTEREST, TAXES,
DEPRECIATION, OR AMORTIZATION.”
FINALLY YOU FACE EARNINGS.
THAT WAS FUN.
Operating income removes the “cost of doing business.” It’s also referred to as “income from operations.” It comes before any one-time costs or credits, referred to as “ex-items.” it also comes before “CAPEX.”
Amazon’s CAPEX is massive and uneven, or “lumpy.” Meanwhile, earnings aren’t even the point for a company busy taking over an entire planet–and they are. And really, nothing insurmountable stands in their way.
Imagine AMZN at 4% of global e-commerce market share. They’re at 2% now. You wanna be there then? We do, and will be.
Thanks for Reading.
STOCKJAW.COM
Images sourced from Pixabay.
https://pixabay.com/en/photos/
Pixabay.com is simply amazing–a sprawling compendium of joy. Thank you Pixabay. If you also know love and use Pixabay’s lavish resource, please take time to donate to them at Pixabay.com. We do, truly.
Additional resources:
Investopedia.com. Seriously Wonderful. Fact.
http://www.investopedia.com/
Charles Schwab. In Our Opinion, the best broker going.
https://www.schwab.com/public/schwab/client_home
STOCKJAW.COM EARNESTLY THANKS YOU FOR YOUR INTEREST AND WISHES YOU THE VERY BEST. THE WORLD BEING WHAT IT IS, WE MUST POST THE FOLLOWING: ALL CONTENT ON STOCKJAW.COM IS PURELY FOR GENERAL EDUCATIONAL AND ENTERTAINMENT PURPOSES ALONE. ANY ACTION TAKEN BY ANY READER IS THE SOLE CHOICE AND RESPONSIBILITY OF SAID ACTOR.
Be careful. Do the work. Have patience, with yourself. Never put your dreams away.
STOCKjAW.COM 