Amazon.com Inc.’s (AMZN)
acquisition of Whole Foods Market proves the Amazon effect is
alive and kicking with scores of retailers slashing prices to
stay competitive. While the e-commerce giant is known for
entering a market, disrupting it and ultimately dominating it,
there are some companies that are insulated from the might of
the online retailer.
That’s according to BMO Capital Markets, which is out with a
list of stocks the Wall Street firm thinks can weather any
moves by what is proving to be a fierce rival. One only has to
look at the impact Amazon is having on supermarket operator the
Kroger Co. (KR) for evidence.
When it reported quarterly earnings last week, shares tanked
not on results but on commentary that pricing is going to be
tough moving forward. (See more: Amazon a Buy,
Could Reach $1,800 by 2022: DA Davidson.)
Which Area Next?
BMO polled its team of analysts to come up with the list of the
stocks, noting the fear about Amazon’s might is even resulting
in attractive entry
points as investors sell off the shares in droves. “We
provide below a list of 13 stocks, each of which the respective
analyst believes is the most insulated, within his/her area of
coverage, from the perceived or, in some cases, very real
threat of Amazon disruption,” BMO said in the note to clients,
which was covered by Benzinga.com. (See also: Amazon to Commit
$5B for a Second Headquarters.)
Ever since the Seattle-based online giant announced its
multi-billion-dollar deal to acquire Whole Foods, shares of
supermarket stocks and retailers have been selling off as
investors fear which area it will go into next. With Amazon in
myriad different segments of retail, no one knows for sure what
it will set it sights on next. Still, while the threat is real
and is prompting some retailers to slash prices to compete, BMO
thinks there is room for others to thrive.
Among the companies that sell to consumers, the Wall Street
firm pointed to Sysco Corp. (SYY), Clorox Co. (CLX), Home Depot Inc. (HD), Take-Two Interactive Software
Inc. (TTWO), TJX Cos.
(TJX), Cott Corp. (COT) and Dave & Buster’s
Entertainment Inc. (PLAY)
as survivors. The same goes for BorgWarner Inc. (BWA) and MSC Industrial Direct Co.
Inc. (MSM), two industrial
companies, and Adobe Systems Inc. (ADBE), Arista Networks Inc.
(ANET), Visa Inc. (V) and Texas Instruments Inc.
(TXN). BMO rates MSC at a
market perform and
rates the others at outperform, noted Barron’s.