John Ballard looks for the best companies within under-capitalized sectors in his Mid-Cap Fundamentals model. This month, he increased the Amazon.com (NASDAQ: AMZN) holdings within the model.
AMZN, like other online stores, is benefiting from an increase in the popularity of online shopping. A recent example we have of this increase are the Cyber Monday numbers from 2010, which showed 12 percent jump from 2009 and the resulting first ever billion dollar online shopping day.
But AMZN isn’t just positioning itself as an online retailer – it’s also positioning itself as a product developer with its Kindle reading device. The Kindle isn’t the only e-reader on the market. It faces competition from Sony (NYSE: SNE), Barnes & Noble (NYSE: BKS) and Borders Group (NYSE: BGP), to name a few. But just like VHS edged out the Betamax, the Amazon Kindle seems to be edging out its competition and is now the best selling product in the history of the website. Naturally, e-books have been selling more copies as the collateral product for e-book readers and many authors have reported that their Kindle e-book sales have surpassed the 1-million mark.
In addition, AMZN is in Sears Holdings (NASDAQ: SHLD) and Netflix (NASDAQ: NFLX) territory with their streaming video rentals and purchases, though a January 7th article in the Wall Street Journal states that AMZN hasn’t “gained much traction” in the sale and rental of streaming movies. (“Amazon Must Fast-Forward Video Plans,” January 7th, 2011, Wall Street Journal.)
