Burning Glass is a labor market analytics firm that recently conducted research for RIS News. This research pertained to retailers that posted the most IT job listings online. This tells us which retailers are truly making the push for a technological edge over their peers going forward.
It may come as no surprise that, Amazon.com (NASDAQ:AMZN) wins by a landslide. However, just because a company is hiring more IT workers doesn't mean it's likely to be the best investment of the group.
Amazon combines retail and technology better than any other retailer in the world. Given the fact that the world is becoming more technologically advanced by the day, this is a good sign for Amazon. The company's R&D expenses have grown from $4.56 billion in 2012 to $$6.56 billion in 2013. This shouldn't be seen as a negative. If increased investment is effective, then it has the potential to increased top- and bottom-line growth in the future.
The most recent technologically advanced news to come out of Amazon was its intention to use drones for deliveries. While it will take some time -- likely years -- for this to become a reality, it should eventually come to fruition. This would put Amazon well ahead of its peers when it comes to delivery speeds, which is a huge factor for customers who order online or via a mobile device. Amazon also has a patent on anticipatory delivery.
Considering Amazon's innovative nature, there's no telling what news it will release next. What we do know is that Amazon posted 17,008 IT job listings online in 2013, far more than second-place finisher eBay (NASDAQ:EBAY) as well as the rest of the pack.
eBay posted 3,047 IT job listings online in 2013. eBay hires IT workers for maintenance on existing projects as well as for innovative concepts. One of the company's most recent innovative concepts is digital storefronts. These are digital touchscreens located in malls; consumers can browse by category and order something that will later be delivered to their home or picked up in a store.
This is a good concept, but there's one big problem: Mall traffic continues to decline across the United States. If more people -- especially younger consumers -- are ordering online and via their mobile devices, a rebound in mall traffic isn't likely, and demand for digital storefronts isn't going to be high.
CVS Caremark (NYSE:CVS) finishes third, with 2,332 IT job listings online in 2013. The primary reason CVS is going after IT workers is to improve its digital and mobile initiatives, which are then expected to improve the customer experience. The company must be doing something right because mobile site and app use jumped 250% in 2013.
The negative for CVS is that it will stop tobacco sales in October, which is expected to lead to a loss of approximately $2 billion in annual sales. Moral or not, it's difficult to see this as a positive.
Wal-Mart Stores (NYSE:WMT) finishes fourth with 1,379 IT job listings in 2013. Wal-Mart is pursuing ship-to-store with the intention of driving more traffic to its physical stores. If more people visit the physical store to pick up products, then it's possible that they will enter the store to add to their purchases. Wal-Mart also has the ultimate goal of getting its products into its customers' hands on the same day a product is ordered.
The negative for Wal-Mart is a customer base that's suffering due to a lack of wage growth opportunities, the end of the payroll tax holiday, and a reduction in food stamp benefits. On the other hand, Wal-Mart's small-box stores could lead to market share gains from the dollar stores in the near future.
Sears Holdings (NASDAQ:SHLD) posted 1,258 IT job listings online in 2013. Sears is suffering on the top and bottom lines, and it needs to improve in any way possible. One potential way is via FitStudio.com -- its primary technological advancement opportunity. However, according to Alexa.com (global leader in online analytics), FitStudio.com has seen its pageviews-per-user decline 36.8% to 3.10 over the past three months. Over the same period, the time-on-site has declined 39% to 4:11.
Leader of the pack
Amazon isn't just the most aggressive retailer when it comes to IT hiring, which is likely to lead to the most technological advancements; it's also likely to be the best long-term growth investment in this group.
Consider Amazon's dominant top-line growth over the past five years, which doesn't just stem from Amazon's innovative ways, but more and more consumers shopping online every day:
With the exception of Sears, all of these companies have performed at least relatively well on the top line over this time frame. Additionally, CVS and Wal-Mart offer dividend yields of 1.5% and 2.5%, respectively.
If you're looking to invest in a company that offers growth potential as well as safety on the bottom line, then you might want to consider eBay, which doesn't have to flirt with profitability like Amazon. eBay currently sports a profit margin of 17.8%, much more comforting to investors than Amazon's razor-thin (though improving) 0.4% profit margin.
The Foolish takeaway
If you're looking for growth and you're comfortable with risk (Amazon is trading at 604 times earnings), then you might want to dig deeper on Amazon. There is no question that it's more aggressive than any other retailer with it comes to technological innovation and advancement.
If you would prefer to invest in a company that's somewhat aggressive with its IT hiring, growing on the top line, and consistently profitable while offering a decent yield, then you might want to consider eBay.
Wal-Mart faces headwinds with its customer base, but those challenges might be overcome thanks to the company's small-box strategy. CVS is performing well at the moment, but cutting tobacco sales is risky. Sears is seeing revenue declines and hasn't delivered a profit in years, making it a high-risk investment. As always, please do your own research prior to making any investment decisions.
Two stocks changing the retail world
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Dan Moskowitz has no position in any stocks mentioned. The Motley Fool recommends Amazon.com, CVS Caremark, and eBay. The Motley Fool owns shares of Amazon.com and eBay. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.