Don’t Shop for Amazon, Overstock or eBay

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The Alibaba (BABA) deal is done and will go down as the largest initial public offering in history. Alibaba generated a lot of noise and excitement on Wall Street, but as usual, individual investors were not able to get in on much of the deal.

e-commerce alibaba amazon overstock ebay

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Big IPOs are the playground of the big funds that generate lots of commission dollars and fees for the brokers. Often in the aftermath of huge exciting deals, investors will start looking for other companies in the same industry to get in on the excitement, but buying into other e-commerce companies to get in on the Alibaba excitement would be a huge mistake.

The following e-commerce companies I looked at using Portfolio Grader just do not have the type of fundamentals to justify purchasing the shares.

Amazon (AMZN)

Amazon (AMZN) is one of the biggest e-commerce companies in the world, and AMZN stock does not hold up to in-depth investigation at the moment. Portfolio Grader has ranked Amazon stock as a “sell” since May 2014.

Amazon has posted negative earnings surprises in two of the last four quarters, and analysts have lowered their estimates for the rest of the year. AMZN stock is down more than 16% this year, and investors who try to catch some of Alibaba’s excitement by buying Amazon shares are likely to be disappointed.

Amazon is a “sell” at the current price.

Overstock.Com (OSTK)

Overstock.Com (OSTK) is another e-commerce giant that investors might consider buying to get in on the e-commerce buzz circulating at the moment. Unfortunately, while Overstock looked pretty good as the year started, the wheels have come off the bus rather quickly.

Overstock posted several negative earnings surprises in a row, and analysts have lowered their earnings estimated for the rest of this year and all of 2015. Portfolio Grader saw OSTK stocks’ deteriorating fundamentals and lowered Overstock to a “sell” back in April.

eBay (EBAY)

EBay (EBAY) is another e-commerce company that some might consider to play a hand in the Alibaba craze, but that would be the wrong move to make.

Analysts have been lowering the expectations for eBay and big investors have avoided the stock so far in 2014. EBay stock has lagged the market advance so far and is down a little over 4% this year.

As conditions have failed to improve at eBay, Portfolio Grader downgraded EBAY stock to a “sell” last week.

Bottom Line

Sometimes a hot successful IPO like Alibaba can create buying interest in similar companies. In the case of Alibaba, buying other leading e-commerce companies would be a bad idea as they just do not measure up right now.

Louis Navellier is a renowned growth investor. He is the editor of five investing newsletters: Blue Chip GrowthEmerging GrowthUltimate GrowthFamily Trust and Platinum Growth. His most popular service, Blue Chip Growth, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, PortfolioGrader.com. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.


Article printed from InvestorPlace Media, https://investorplace.com/2014/09/amazon-amzn-overstock-ostk-ebay-alibaba/.

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