Stock Picks: AMZN, FDX, UPS

stock-picks

By Dmitriy Gurkovskiy, Chief Analyst at RoboMarkets

In our latest reviews, we highlighted the importance of insider transactions, which may lead to very high yield in the respective stock picks. Today, we will again review the stocks with high insider activity.

Amazon.com, Inc. (NASDAQ: AMZN)

Amazon.com, Inc. and Jess Bezos, its CEO, were the cause of losses incurred by various companies worth billions of dollars last week. Let’s delve into this now.

Fedex and UPS were first to get ‘struck’ by Amazon.

On Thu, June 28, Amazon announced its new Delivery Service Partners service that would allow people to build their own shipping business under Amazon brand with a truck fleet of up to 40 vans. One can start with as low as $10,000, after completing a verification process with Amazon. Such partners will get their parcels shipped at one of the 75 Amazon local offices scattered over the US. The truck drivers will wear special kit featuring Amazon logo. The parcels will be shipped to other Amazon partners, too, including Fedex and UPS.

Such a decision was determined by huge e-commerce growth, where the existing shipping companies are no longer to meet the increasing demand. Amazon also highlighted risks in working with Fedex and UPS, as those may not be able to agree on acceptable terms.

Meanwhile, the shipping costs increased from $11.5B in 2015 to $21.7B in 2017, and this tend is still active. With the new service in place, Amazon will control a part of these costs.

AMZN

In the light of this news, FedEx market value dropped by $823M.

FedEx (NYSE: FDX)

FedEx Corporation was founded in 1971 by Frederick W. Smith, and is headquartered in Memphis, Tennessee. This company provides postal, courier, and logistic services around the globe. In particular, it owns one of the largest freight carrier fleets in the world. Currently, there are around 117,000 employees at FedEx, also scattered across the globe.

On June 20, the company reported its earning during fiscal Q4 that ended in May. Its net profit went up from $1.02B, or $3.75 per share, to $1.13B, or $4.15 per share. Such a positive report was still unable to boost the market value, which, on the contrary, shrank, and the share price went down, too. One of the major reasons behind that was the trade war between the US and China started by Trump and his cabinet. This may severely decrease the turnover between the two countries, which will of course influence FedEx revenue.

FDX

UPS was another loser after the Amazon news came out: this one lost $2.16B in market cap, and its shares are currently still moving down.

United Parcel Service (NYSE: UPS)

United Parcel Service was founded back in 1907 by James Casey, and is headquartered in Atlanta, Georgia. This company focuses on express shipping and logistics. Currently, its staff comprises 454,000 employees across the globe. United Parcel Service owns the UPS Airlines company with 237 carriers catering to customers in over 220 countries.

According to the UPS earning report over Q1, the net profit went up to $1.345B, much higher than $1.104B in Q4 2017. The report came in late April, and by then the share price was steadily going up, but then the same thing happened as it did with FedEx: first trade wars, and then Amazon news influenced the stock negatively, which brought it drastically down.

UPS

Just in a few hours more, Amazon struck the US pharma business, too, after announcing the acquisition of PillPak, which, some say, cost the company $1B.

PillPak was founded in 2013, and focuses on delivering prescribed medicines for daily usage, mainly for those who suffer from diabetes, hypertension, and obesity.

This news also led to massive market cap fall, around $14.5B in total.

Such an acquisition shows Amazon’s interest in healthcare, which is a bad signal for those who already invested into this sector. This is because the competition will get harder, and only the strongest will survive, while Amazon is a very rich and powerful competitor for anyone.

Amazon managed to ‘drop’ Walmart shares, too, as the latter also wanted to buy PillPak, if at a smaller amount. The wholesale giant lost $3.04B in market cap Thursday, but, unlike other companies, this was quite in line with the normal intraday volatility.

Walmart

Several other companies got struck, too, including Walgreens Boots Alliance (NASDAQ: WBA), the largest retail pharma company. Walgreens Boots Alliance manages over 13,100 pharmacies and cosmetics shops in 11 countries.

Walgreens market cap went down by $6.51B, and the shares have not recovered yet.

Walgreens

McKesson Corporation (NYSE: MCK) is a large pharma company, a major distributor and pharmacy chain. headquartered in San Francisco, CA, it also has local offices in Australia, the UK, Ireland, Netherlands, and France. McKesson Corporation owns a chain of franchising pharmacies operating under the brand of Health Mart.

McKesson Corp. market cap went down by $1.79B, and is still going down.

McKesson

AmerisourceBergen Corporation (NYSE: ABC) is a US based company specializing in drug sales both in the US and internationally. It was founded in 2001 after the merger between Ameri Source Health and Bergen Brunswig, and is headquartered in Chesterbrook, PA.

After the Amazon news came in, ABC lost $818M in market cap, but started recovering even before the end of session.

AmerisourceBergen

Cardinal Health (NYSE: CAH) focuses on medicine sales and medical goods production, which includes medical gloves, medical kit, and liquid collection drugs. Besides, CAH sells radioactive tracers and caters to over 75% hospitals in the US.

Cardinal Health market cap went down by $795M after Amazon and PillPak merger was announced. Currently, the share price is still moving down.

Cardinal Health

CVS Health Corporation (NYSE: CVS) was founded back in 1964 and is headquartered in Woonsocket, Rhode Island. The company focuses on selling drugs and other medical goods. CVS Health Corporation started as a chain of health&beauty stores, but then added pharmacies to its portfolio. As of now, the company owns and operates 6,900 pharmacies in 41 states of the US.

CVS market cap dropped by $4.34B on Thu at the market opening, and while the price was trying hard to recover, it continued falling on Fri.

CVS Health Corporation

It is curious that all stocks, except for AmerisourceBergen Corporation (NYSE: ABC), were trading under the 200-day SMA when the news came in, which means the descending trend was quite possible; this means the news just sped up the process.

Investors can seldom predict such unexpected events, but there’s tech analysis, and it warns us against potential positive or negative factors.

 

Disclaimer

Any predictions contained herein are based on the authors’ particular opinion. This analysis shall not be treated as trading advice. RoboForex shall not be held liable for the results of the trades arising from relying upon trading recommendations and reviews contained herein.

Having majored in both Social Psychology and Economics, I went on to continue my education in post graduate. Later I worked as a team lead of a tech and fundamental analysis lab in the Applied System Analysis Research Institute. This helped me to acquire all necessary skills and experience to become a successful trader and analyst, as well as a portfolio manager in an investment company. I'm a pro in the financial field and the author of articles for various international media. I also hold the position of Chief Analyst at RoboMarkets.