Surviving the onslaught of Amazon.com Inc (NASDAQ: AMZN), yet alone thriving under its thumb, requires brick-and-mortar retailers to have one or more of the following characteristics: products that consumers do not purchase online, strong brand loyalty and in-store expertise that Amazon can’t provide in its online environment. And the following five companies are all Amazon-proof stocks.
If you’re looking to buy the shares of brick-and-mortar retailers, then you should undoubtedly purchase those that are unaffected, or as close to unaffected as possible, by Jeff Bezos & Co. Here’s why:
Amazon-Proof Retail Stocks: Home Depot and Lowe’s (HD, LOW)
When people prepare to carry out home improvement products, they often have questions about how to do the project, what tools to use for the project and what techniques to utilize, etc. At Home Depot and Lowe’s stores, consumers can find employees who can answer such questions.
In some cases, consumers have even built relationships with individual employees of the home improvement chains. Of course, it’s impossible to find employees to answer questions when one shops on Amazon, let alone develop relationships with these nonexistent helpers.
Furthermore, HD and LOW should also be boosted by very strong new housing sales, as last month building permits reached their highest level since 2007.
Considering these positive attributes, investors should buy Home Depot stock and Lowe’s stock.
Amazon-Proof Retail Stocks: Best Buy (BBY)
Like Home Depot and Lowe’s, Best Buy offers human expertise about complicated topics. Of course, Amazon can’t provide similar expertise. Additionally, the quantity and complexity of popular tech products are increasing all the time, making BBY employees even more valuable to consumers.
Wearables, drones, virtual reality and augmented reality devices, and virtual assistants are just some of the new tech products that are likely to spark many questions by consumers.
Moreover, BBY continues to benefit by being the only national, dedicated, sizable consumer electronics brick-and-mortar retail chain.
Investors should buy Best Buy stock in order to benefit from all of these attributes.
Amazon-Proof Retail Stocks: Costco (COST)
COST specializes in selling products in tremendous bulk, and consumers do not usually buy products in tremendous bulk on Amazon. In January, research firm Oppenheimer wrote that Costco’s sales growth had accelerated, “thanks to merchandising and pricing initiatives as well as a stronger spending backdrop.”
Calling the company’s fundamentals “strong,” the firm noted that the retailer’s “U.S. core” comparable sales growth had surged to 9.1% in December. In January, the company’s same-store sales jumped 6%.
A key reason behind the success of COST is the loyalty of its shoppers. In December 2015, Fortune reported that 91% of the company’s members had paid the $55 fee to renew their membership for 2016.
“According to analysts, the low price of memberships and a steady return of loyal members is what sets it apart from big-box and department store retailers,” Fortune reported.
Judging by the company’s recent sales growth, that loyalty is still very much intact. Costco’s results are likely to continue to be strong going forward, making Costco stock a buy.
Amazon-Proof Retail Stocks: Macy’s (M)
In June 2017, The Wall Street Journal noted that 9% of the giant retailer’s “customers account for 46% of its annual sales.”
Clearly, the company has a significant group of hardcore, high-spending, highly devoted fans who aren’t going to start buying their clothes on Amazon anytime soon.
The company also benefits from being in a sector — high-end apparel — that Amazon is never going to totally dominate, since many people like to touch and feel expensive clothes before buying them.
Additionally, Macy’s earlier today reported fourth-quarter earnings per share of $2.82, versus the consensus outlook of $2.71, showing that it is still very profitable.
Finally, the valuation of Macy’s stock, which has a forward price-earnings ratio of 9.41, is still quite undemanding and attractive, so investors should buy Macy’s stock at current levels.
As of this writing, Larry Ramer did not own the shares of any of the companies mentioned above.