Stock Talk #7: AMZN, All Time Highs and the Old / New Corona Premium

AMZN is the most recognizable large-cap star of the post-Corona stock market:

This data comes courtesy of Finviz, an amazing stock data visualization website I highly recommend. It shows 3 month performance for all stocks currently in the S&P 500. Alongside AMZN, MSFT, WMT, COST, CCI (Crown Castle, owns cell towers) and the pharma names stand out (LLY, GILD).

AMZN specifically has caught my eye because it’s up 14% in the last week and made an all-time high yesterday:

What’s interesting is more than a few stocks are making all time highs right now. WMT, DOCU (Docusign), CHWY (Chewy, pet food), DG (Dollar General) and others on the link above all are at their highest valuation ever. A focus of many during crises is stocks that get pummeled and never return to their pre-crisis highs. But what about stocks that begin multi-year bull runs?

These stocks are showing themselves right now. AMZN among them has the largest market cap ($1.14 trillion). Maybe the most simplistic way to think about Amazon is that it’s a proxy for monetized activity on the web (owns 33% of the cloud infrastructure via AWSowns ~40% of e-commerce market). These markets were growing pre-Corona virus (even while AMZN’s share of them was declining) and will likely see accelerating growth during and after C19.

I still think stocks like CHEF deserve portfolio allocations based on the crazy discounts they’re trading at, but the AMZNs of the world the market is telling us are the winners right now and likely after Coronavirus. I’m a fan of paying reasonable premiums for great businesses, and the market has a way of letting these winners ride regardless of valuation (AMD and TSLA also come to mind here (although not recommending either)). It’s an obvious statement at this point, but Corona is going to change businesses forever, and some companies are going to see earnings growth this year and in future years because of it.

Last thing – I hate to receive surveys as much as the next guy, but I’m starting a Stock Talk podcast. I want your feedback on how to structure this podcast and made a short survey here. Fill it out if you get a second and next beer’s on me.

– Brostoff