This week’s Alpha Algorithm has identified yet another U.S. retailer as a favorite among Wall Street’s smart money: online shopping giant Amazon.com (AMZN).
Founded in 1994 and headquartered in Seattle, Washington, Amazon.com, Inc. sells consumer products in North America and internationally. Amazon also manufactures and sells electronic devices, including Kindle e-readers, Fire tablets, Fire TVs, Fire phones and Echo, an Internet-connected speaker.
Amazon.com (AMZN) (blue) vs S&P 500 (red) over 3 months
Seven Top Investment Strategies Betting on Amazon.com (AMZN)
- Hedge Fund Alpha
Based on publicly available disclosures, successful hedge fund managers are investing in the stock.
- Hedge Fund Gurus
Apple is one of the top U.S.-listed equity positions reported on Form 13F by select hedge funds with concentrated top holdings.
- Large Cap Growth
The stock is among the top 50 large-capitalization U.S. growth stocks generated through a rigorous 10-factor fundamental screening process.
- Large-Cap Growth and Value
Using a proprietary ranking based on separate models for growth and value, this is a large-cap stock that is part of an index that has historically outperformed its market-cap weighted benchmark.
- Momentum Factor
The stock also is one of the top 120 large- and mid-cap U.S. stocks exhibiting relatively higher price momentum, as measured by a specific factor which has historically driven a significant part of companies’ risk and return.
- Morningstar’s Moat
This stock is included in a strategy that tracks an equal-weighted index of 20 companies that Morningstar determines to have the highest fair value among firms with a sustainable competitive advantage or “moat.”
- Small-Cap/Value Tilt
Selected using a multi-factor modeling approach, the stock is a smaller-cap or value stock designed to enhance portfolio risk/return characteristics.
Buy Amazon.com (AMZN) at market today.
Place your initial stop at $640.00.
In the current volatile market environment, I am holding off on recommending any options in this position for now.
For all of the fallout after the United Kingdom’s Brexit vote, your Alpha Algorithm portfolio held up remarkably well compared to the broader market.
You were stopped out of Aflac Incorporated (AFL) last Friday at $68.68 when it opened below its raised stop price of $69.85. You gained 8.85% on this position.
You also were stopped out of another large financial stock, American International Group, Inc. (AIG) at a loss.
But considering European bank stocks tumbled as much as 30% after the vote last Friday, this was a relatively benign result.
As an example, last week’s Alpha Algorithm recommendation, Sherwin-Williams (SHW), ended its first week in the portfolio only a hairsbreadth down.
No fewer than four of your Alpha Algorithm positions — AT&T, Inc. (T), Johnson & Johnson (JNJ), Walmart Stores, Inc. (WMT) and Altria Group Inc. (MO) — hit six-month highs this past week.
Both AT&T, Inc. (T) and Johnson & Johnson (JNJ) are within striking distance of double-digit percentage gains, despite the market turmoil.
Bigger and boring is better so far in 2016.
Nicholas A. Vardy