Amazon Stock Price Still Cheap, Steve Grasso Says
Amazon stock lagged Thursday as the stock market had its best day in two weeks, but trader Steve Grasso remained bullish on the online retail giant.
“If you evaluate it, you have to evaluate it as a bunch of different things. You have to evaluate it as a cloud play, as a streaming play, as a retail play,” he said on “Fast Money.”
As a straight retail play, Grasso conceded, Amazon might look expensive. But as a multifaceted technology play, “I think it’s still cheap.”
Grasso also noted that Amazon’s Kindle was No. 2 in the tablet market.
Amazon stock closed at $179.93, down 2.5 percent.
Tim Seymour of EmergingMoney.com wasn’t a buyer.
“At 130 times earnings, I don’t need to own Amazon in an environment where I don’t know that the U.S. consumer is alive and well,” he said. “You’re looking for fantastic companies, Amazon is that, but is it at a great price here?”
Seymour said that was the reason for rotation out of the pricey stock for retailers with cheaper retailers.
“We’re short Amazon for three reasons: Top-line slowing, margins are compressing, and it’s an expensive stock,” said Keith McCullough of Hedgeye Risk Management. “You can’t be an expensive stock if you have those other two things happening at the same time.”
McCullough added that valuation was an issue plaguing other retailers, such as Bed, Bath & Beyond.
“If they can’t deliver sequentially accelerating revenues and margin expansion, they’re going to have a problem,” he said.
Guy Adami of Drakon Capital looked to a pattern that emerged last year. An intraday low of $175 might be a signal that Amazon’s share price might be setting up for a big bounce, having gone from around $171 in August to $245 by October.
“I’m not saying that same type of move is going to happen, but now you have something to trade against in the form of that $175 low today,” he said. “To me, the risk-reward sets up much better on the long side than the short side, and I’m not saying it can’t go lower. I’m just saying in terms of a trade, it might be worth a look here.”
Got something to to say? Email us at firstname.lastname@example.org and your comment might be posted on the Rapid Recap. If you'd prefer to make a comment, but not have it published on our website, email email@example.com.
Trader disclosure: On Feb. 16, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Grasso is long ASTM; Grasso is long S; Grasso is long XLU; Grasso is long AVAV; Grasso is long BA; Grasso is long D; Grasso is long DIO; Grasso is long LIT; Grasso is long MHY; Grasso is long NUAN; Grasso is long MO; Grasso is long PFE; Grasso is long PRST; Seymour is long BAC; Seymour is long INTC; Adami owns C; Adami owns GS; Adami owns MSFT; Adami owns AGU; Adami owns NUE; Adami owns INTC; Adami owns BTU
For Steve Grasso
Stuart Frankel & Co and it’s partners own CSCO
Stuart Frankel & Co and it’s partners own HPQ
Stuart Frankel & Co and it’s partners own MU
Stuart Frankel & Co and it’s partners own P
Stuart Frankel & Co and it’s partners own ZNGA
For Mike Khouw
For Erica Maschmeyer
Robert W. Baird & Co. Incorporated makes a market in the securities of JWN.
For Brad Hintz
Brad Hintz, as a former Managing Director at Morgan Stanley Group (MS), owns an equity position in MS that is held in a Morgan Stanley Group ESOP Trust at Mellon Bank as convertible preferred stock. These MS ESOP securities were awarded to him as compensation and are fully vested. Mr. Hintz is also an investor in Morgan Stanley Capital Partners III, LP — a merchant banking fund where Morgan Stanley maintains an equity interest as a limited partner. Mr. Hintz participates in the Morgan Stanley Pre Tax Investment Plan, which is a deferred compensation plan structured as a note to Mr. Hintz from Morgan Stanley with the return on the note tied to one of many alternative asset classes. In addition, as a result of the complete spin-off of Discover from Morgan Stanley on June 30, 2007, Mr. Hintz received a long position in Discover stock as a beneficiary of the Morgan Stanley ESOP. These shares of Discover will ultimately be distributed to Mr. Hintz by the ESOP trustee.
For Adam Holt
Morgan Stanley & Co. International PLC and its affiliates have a significant financial interest in the debt securities of Adobe Systems, Autodesk, Intuit, Microsoft, Oracle Corporation, Symantec.
For Zach Karabell
River Twice is long GOOG
River Twice is long AAPL
River Twice is long MA