Friday, January 25, 2013

Amazon stock analysis next week

Amazon stock analysis next week jan 28 -1 feb 2013 : Amazon stock prices is best stock to watch for next week and What's happening: (AMZN +3.79%) stock has been on fire over the last two months. While the majority of the retail sector had a lackluster holiday shopping season, things were great at Amazon. Online sales were higher than any holiday season in the past, and Amazon was the top used e-commerce site. Amazon has emerged as one of the strongest technology companies, also finding success in the highly-competitive tablet market with its Kindle Fire. Amazon is willing to sell its Android-powered tablet at a loss in exchange for gaining market share and using the tablet as a point of sale device to bring more users to its Amazon store. Analysts expect Amazon to report fourth quarter earnings On January 29 of $0.27 per share, down from $0.38 during the same period last year.

Technical analysis: AMZN was recently trading at $268.11, down $6.39 from its 12-month high and $96.11 above its 12-month low. Technical indicators for AMZN are bullish and the stock is in a weak upward trend. The stock has support above $254.25 and resistance below $262.75. Of the 30 analysts who cover the stock 22 rate it a "strong buy," one rates it a "buy" and seven rate it a "hold." The stock receives Standard & Poor's 3 STARS "hold" ranking.

Analysts' thoughts: We expect Amazon to show continued strength through 2013. Consumers trust the Internet for their shopping needs and Amazon remains the leader in the industry. While other companies have failed to really make an impact in the tablet market, Amazon entered the market and quickly had the best-selling Android tablets on the market. Amazon is estimated to have sold around 6 million Kindle Fire tablets during the holiday season. As Amazon continues to penetrate the market, it will improve revenues from its digital downloads. Since the margins on its digital downloads are so high, the more tablets it can sell the better. Amazon was very clever to sell the tablets at a loss, and its forward thinking approach to using the Kindle Fire as a point of sale device will pay off huge down the road.

Stock-only trade: While we are bullish on the stock, we would not recommend jumping into a new position at the current time. We would rather set up a new position only on a dip and would likely get into the stock under $240 a share.

Option trade: If you are looking for a hedged options trade on AMZN, consider a March 225/230 bull-put credit spread for a 45-cent credit. That's a potential 9.9% return (70.8% annualized*) and the stock would have to fall 14.0% to cause a problem.

Speculative call-only trade: For those of you with an appetite for higher risk and bigger returns, consider buying the July $280 call. If AMZN rises just 13.5% you can pull in a 20% or better profit on the option. However, if the stock moves lower, this kind of trade could lose a significant amount.
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