Amazon has been an A- pick of mine for months, not just because of the numbers. The numbers. Oh baby. The Co's first-quarter report was scintillating. A rehash: up 32% on quarterly revenue, 117% in earnings growth, a return on equity of nearly 80%, as well as reinvigorated EPS.
That's the good stuff. The reality right now is that AMZN has the choir singing its praises, and at $73.84, the stock is in Cloud 9 territory. A far cry from three months ago, before the explosive Q1 numbers were released. Jeff Bezos has few peers among CEOs, but even he cautions that the Co's investments sometimes take a few years to bear fruit. Such is the case with Amazon's voyage into China. The payoff is coming in time, but it won't show in the next report, or even the one after that.
That's why I've cautioned my old friend to be careful. Though I love the Co, a healthy entry point is tough to find today, or immediately after next week Tuesday's earnings report is out since Q2 numbers are historically Amazon's weakest of the year.
Akamai is a B+ pick. Earnings growth (66%) and quarterly revs (53%) are astronomical. EPS have soared from $.30 in 2004 to 52 cents in '05, 88 cents in '06 and projects out at $1.28 in '07. Still, I'm not as high on AKAM ($49.14) as I am on AMZN because of a forgettable ROE (7%). Unlike Amazon, Akamai's chart isn't as overextended. With Akamai's earnings report due next week Wednesday, it's another stock worth watching from a distance.
That's why I expressed no resistance when my old friend said he's not going to bother with stocks. Instead, he'll just spend his hard-earned money on women.
I'd rather spend the money on shares of Amazon, Akamai and Apple, but that's just me.
Disclaimer: Pupule Paul is not long in AMZN or AKAM, but has a small slice of AAPL.
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