Electric investment

The most traded international stock may surprise some: $40bn tech innovator Tesla Motors (NASDAQ: TSLA.US). Founder Elon Musk, an entrepreneurial designer, engineer and inventor, wants nothing less than to save the world through the power of electric vehicles and solar technology. But is he aiming too high?

Investors were sceptical about the recent merger between Tesla and another Musk project, struggling solar energy firm SolarCity, but fell silent when Tesla unexpectedly posted what was only its second-ever quarterly profit in October. The world is now waiting to see if the new Model 3 Sedan will drive it into the mass market. Investors remain wowed, with the share price up more than 50% over the past year to $250, which leaves it trading at a whopping 137 times earnings. That’s a bit beyond my pocket (like its cars). Tesla thrills, but could also suffer spills. 

Take a bite

The second most popular global stock is no surprise at all: $677bn behemoth Apple Inc (NASDAQ: AAPL.US). Yet it has just been overtaken by Google as the world’s most valuable brand, in the latest Brand Finance Global 500 report. Apple’s brand value has fallen 27% to $107.1bn, due to rising smartphone competition from the likes of Samsung and Huawei, and falling customer goodwill. So has it lost its shine?

A few years ago people couldn’t resist waving their fancy iPhones in my face, yet I still haven’t seen an Apple Watch in the flesh. The company has lost its flash of innovatory genius and I suspect the Western world has hit peak gadget. Sensible people want their lives back.

That said, last week’s Q1 results showed Apple selling more iPhones than ever before, and setting all-time revenue records for iPhone, Services, Mac and Apple Watch. The App Store is doing record business as the company wisely shifts focus from products to services. The stock is up 37% a year to $129. The dividend is higher than 1.77%. Apple still looks worth a bite, especially at 15 times earnings.

In the zone

You need no introduction to $385bn online retailer Amazon.com (NASDAQ: AMZN.US). In fact, you’re probably still paying off the Christmas shopping bill you ran up at Amazon. The Brand Finance Global 500 has just named it one of the companies with the highest rising brand value, up 53%.

It continues to grow strongly while revolutionising the retail market in the US, UK and beyond, and continuing to take market share. It suffered a rare setback in the Q4 with revenues of $43.74bn falling short of the estimated $44.68bn. Even a small slip-up can hit investor confidence when the stock trades at 171 times earnings.

So how much further can Amazon go? The success of Prime and the deep pockets that will allow it to break new markets suggests there’s more to come. Jeff Bezos’s company has justified its sky-high valuation before, and almost certainly will do again.

The post Are Tesla Inc, Apple Inc., & Amazon.com Inc as good as UK investors think they are? appeared first on The Twelfth Magpie.

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Harvey Jones has no position in any shares mentioned. The Motley Fool UK owns shares of and has recommended Amazon, Apple, and Tesla. The Motley Fool has the following options: long January 2018 $90 calls on Apple and short January 2018 $95 calls on Apple. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

What’s cooking?

Amazon launched its nationwide same-day grocery delivery service Amazon Pantry last autumn, but the hook-up allows it to offer fresh and frozen food for the first time. Subscribers to Prime Now and Amazon Pantry will soon be able to order hundreds of Morrisons products for home delivery. It isn’t hard to see the practical benefits to Amazon, which can now offer perishable items such as soups and orange juice without having to build up a costly supply chain first.

It’s even easier to see the attraction for Morrisons. The mere fact that it has hooked up with a big-hitter like Amazon will raise its standing among investors. It also allows the Bradford-based supermarket to access more customers in the wealthy Greater London area, where its presence is minimal. Maybe it will put a stop to all those sneers about being slow-off-the-blocks in the online grocery race. 

The stock was already on a roll after hitting a low of 139p in December. Today, Morrisons trades at nearly 204p, some 46% higher than its pre-Christmas low. As we’ve seen in the oil sector, contrarians brave enough to buy apparently burned-out stocks can make red-hot returns from time-to-time.

Bitter fruit

Amazon and Morrisons may be enjoying each other’s company, but Tesco boss Dave Lewis has been left feeling like a gooseberry. Despite its recent troubles, Tesco has always remained the big boy on the block, with the punching power to inflict serious damage on rivals if it ever got its act together. 

Tesco has nevertheless struggled against German upstarts Aldi and Lidl. But now the competition has got bigger and badder, especially given Amazon’s willingness to sacrifice short-term profits for long-term market share. Amazon Prime customers get free delivery for just £79 a year, against up to £5 a pop from the big four (who still make a loss on the £20 cost). Expect more complaints about Amazon’s relatively cushy tax arrangements, which give it another edge over Tesco and Sainsbury’s.

Delivering the goods

J Sainsbury’s share price has largely shrugged-off the threat but that may change as we watch Amazon’s progress. Online groceries are big business for Sainsbury’s, with Q3 sales up nearly 10% and orders up 15%, and investors won’t want to see that slow or go into reverse.

Amazon still needs to prove that it can compete by offering customers the same level of choice as Tesco and Sainsbury’s, as I believe most online customers will prefer a one-stop shop. But given its track record, investors now have another reason to fear the supermarket sector.

The post Will Amazon.com, Inc & WM Morrison plc Sink Tesco PLC And J Sainsbury plc? appeared first on The Twelfth Magpie.

More reading

• Here’s what a surging Tesco share price has done to £10,000 invested 5 years ago
• SpaceX vs Amazon stock: here’s where I’ve got my money
• Are Tesco shares losing their momentum?
• 3 reasons I’m still bullish on out-of-favour Amazon stock
• If this Dow Jones stock were valued like SpaceX, here’s how much it would be worth…

Harvey Jones has no position in any shares mentioned. The Motley Fool UK owns shares of and has recommended Amazon.com. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.