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It seems that Amazon Fever is reaching new heights. With Amazon’s recent agreement to acquire grocery retailer Whole Foods, the market can’t entirely be faulted for assuming that their ever-growing reach and apparent lack of concern about profits will ultimately take over the economy. And typically, when Amazon enters a new line of business, many of the stocks in that sector fall.
Our informal search on amazon.com returned some fascinating and unexpected products for sale: a $31,861.88 (plus $3.09 shipping) Telescoping Maintenance Lift weighing 1,420 pounds; a $237,250 Lamborghini Huracan (the real thing); a $270,834.42 (used) Cisco Services Module and a Mahatma shipping drone that carries 22 pounds of cargo over six miles selling for $40,000. Could Amazon get into travel services? Or home building? What about chemical production? It’s hard to say; but back in 1997 when Amazon had its IPO as an online bookseller, who would have thought that it would reach half a trillion dollars in market capitalization and begin setting up an air traffic control network in Paris for its incipient global drone fleet?
Amazon certainly is impressive. Realistically though, not every industry will be challenged by their profit-draining expansion, nor will every product be sold at large discounts on amazon.com. In our July Turnaround Letter, we explore a brief selection of companies that would probably be among the last ones to succumb to Amazon Fever. Each has traits that are well outside of the Amazon model, are out of favor and have some interesting turnaround aspects.