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Good morning,
Markets are called to open lower in Europe this morning. This is what's happening today:
Companies reporting results in Europe today are: Deutsche Bank, Ericsson, Shell, Diageo, AstraZeneca, BSkyB, Novo Nordisk, Banco Santander, LVMH
Companies reporting results in the US today are: ConocoPhillips, Colgate-Palmolive
The US surprised the markets yesterday when they reported a negative growth figure for Q412. The market is expecting week job data tomorrow after the Fed yesterday said it will keep on buying securities in the market – up to $85bln a month! The dollar kept on declining against the Euro. It is now trading at $1.3567. Markets in the US are expected to open flat though its still too early in the day to be commenting about US markets.
On a more positive note, the Philippine and Taiwan economies grew more than forecast last quarter, and Singapore’s jobless rate fell to a five-year low, signaling an upswing at the end of 2012 that underscores Asia’s role leading a global recovery. In the Philippines, GDP grew 6.8% from a year earlier, while Taiwan reported a preliminary 3.42% gain and upgraded its full-year growth forecast. Singapore’s unemployment was 1.8%.
Asia’s resurgence as China rebounds contrasts with the US reporting an unexpected decline in GDP after defense spending plunged. Meantime, Japan’s economic outlook depends on Prime Minister Shinzo Abe reviving wages and spending, with less-than-forecast industrial output for December highlighting the challenge ahead.
Today i'd like to talk about a switch we are proposing. SELL Amazon and BUY eBay. Both companies are in the same sector though the difference is that Amazon is trading on a PER of 757.68x and eBay is trading on a PER of 28.75x. It is true, you cannot look at PER when comparing growth stocks, however one must also keep in mind that Amazon is a 17 year old company and we aren't expecting much change going forward. Lets look at the Price-to-book. Amazon 15x, eBay 3.4x!
I have spoken about Amazon before it issued results and after it issued results. My opinion on the company did not change after the results. Infact, I am more convinced now that it is time to get out of Amazon and the name is being removed from the CC equity list. Amazon, reported a net loss on the year yesterday and missed analysts forecasts for both revenue and earnings and yet the shares were up 9% at the beginning of the trading session though started to lose steam and closed the session 4.8% up. The reality is that Amazon’s top line is unlikely to accelerate significantly in the near future. While the future might be bright, Amazon is now 17 years old. Sales, earnings, and operating margins might improve, but they aren’t likely to look entirely different a few years from now. And while those numbers aren’t bad, the shares are trading on a PER of 757.68x and don't even give out a dividend!
eBay on the other hand reported Q412 results which were ahead of expectations. Revenue growth accelerated 16% yoy and the company continues to benefit from mobile as mobile apps attacted 4.3 million new users to eBay in 2012 and generated $13 billion in total commerce volume. The company expected continued momentum and expects eBay and Paypal mobile to each generate over $20 billion in volune in 2013. Ebay as opposed to Amazon is trading on a PER of 28.75x and Barclays are overweight on the stock with a price target of $60/share.
For more information on these two stocks and other stocks and bonds we follow, contact our offices on 25688688.
Good day and happy trading!
Kristian Camenzuli
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