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Amazon.com Inc.’s acquisition of Whole Foods Market proves the Amazon effect is alive and kicking with scores of retailers slashing prices to stay competitive. While the e-commerce giant is known for entering a market, disrupting it and ultimately dominating it, there are some companies that are insulated from the might of the online retailer.
That’s according to BMO Capital Markets, which is out with a list of stocks the Wall Street firm thinks can weather any moves by what is proving to be a fierce rival. One only has to look at the impact Amazon is having on supermarket operator the Kroger Co. for evidence. When it reported quarterly earnings last week, shares tanked not on results but on commentary that pricing is going to be tough moving forward. (See more: Amazon a Buy, Could Reach $1,800 by 2022: DA Davidson.)
Which Area Next?
BMO polled its team of analysts to come up with the list of the stocks, noting the fear about Amazon’s might is even resulting in attractive entry points as investors sell off the shares in droves. “We provide below a list of 13 stocks, each of which the respective analyst believes is the most insulated, within his/her area of coverage, from the perceived or, in some cases, very real threat of Amazon disruption,” BMO said in the note to clients, which was covered by Benzinga.com. (See also: Amazon to Commit $5B for a Second Headquarters.)
Ever since the Seattle-based online giant announced its multi-billion-dollar deal to acquire Whole Foods, shares of supermarket stocks and retailers have been selling off as investors fear which area it will go into next. With Amazon in myriad different segments of retail, no one knows for sure what it will set it sights on next. Still, while the threat is real and is prompting some retailers to slash prices to compete, BMO thinks there is room for others to thrive.
Among the companies that sell to consumers, the Wall Street firm pointed to Sysco Corp. (SYY), Clorox Co. (CLX), Home Depot Inc. (HD), Take-Two Interactive Software Inc. (TTWO), TJX Cos. (TJX) and Dave & Buster’s Entertainment Inc. as survivors. The same goes for BorgWarner Inc. (BWA) and MSC Industrial Direct Co. Inc. (MSM) two industrial companies, and Adobe Systems Inc. (ADBE), Arista Networks Inc. (ANET), Visa Inc. (V ) and Texas Instruments Inc. (TXN).