You must study the Amazon effect before you buy any shares
Investors should influence the Amazon effect in their stock picking homework because the company is a "Death Star" that can interfere with any industry it decides to look at, CN Cracker Jim Cramer said Monday.
" Any company with any kind of consumer product can potentially end up in their crosshairs, and it's a very dangerous place to be, "said the Mad Money host. [19659003] Amazon The effect continues to have a daunting impact on most brick-and-mortar dealers, and the entertainment industry may be next in its way, and Spotify has become a dominant name in the audio world by offering both free, ad-supported and subscription streaming music models. It also makes a mark in the extremely popular podcast segment.
But shares of the streaming platform ended Monday down 4.4% on news that Amazon could release a free music playback service on its Echo device as soon as next week.
"Now as we know [Amazon̵[ads1]7;s] interested, Spotify's stock will never act the same again … Amazon has a large installation based on 100 million units that can easily do this service and destroy Spotify & # 3 9; s moat [and] potentially transform it into an absolute also its own industry, "Cramer said. "I think Amazon can do just about anything it puts right now."
Amazon could potentially throw off shipping and shipping companies, such as FedEx and GrubHub, as it builds its own transport business, he said. The tech behemoth has already flipped away at Walgreen, which faces problems in the front of the store and the pharmacy, and CVS, which cares for its healthcare strategy with Aetna, Cramer said.
Amazon has buddied up with JP Morgan Chase and Berkshire Hathaway on a project called Haven to reduce health costs.
"They could theoretically have the same negotiating power as Medicare or [U.S. Department of Veterans Affairs]. The health care seems quite vulnerable," Cramer said.
However, there are several companies that have managed to protect their market share and not capitulate to rumors that Amazon will come for its industries, Cramer said. Earlier Monday, Best Buy ordered Corie Barry, who was responsible for the reseller's resignation program for Amazon, from CFO to CEO. Autozone retained its place in the auto parts industry after pushing from Amazon last year.
Home Depot, Lowe and Cisco have all fended off Amazon, he added. Industries where businesses do not include a practical service or work for a customer are vulnerable, he said.
"The next time you think about buying a stock, you have to ask yourself a question – add this to your homework checklist: Can Amazon come in and destroy the company's margins? If so, lower your expectations," says Cramer.
Note: Cramer's charitable trust owns shares in Amazon.com and Home Depot.
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