3 Reasons to Love Amazon in 2014

These three catalysts should move Amazon's stock higher in the quarters to come.

Apr 8, 2014 at 4:25PM

It's been a busy year so far for Amazon.com (NASDAQ:AMZN). The world's biggest online retailer has been in full press mode since the start of 2014 as it attempts to take a bigger share of the video streaming market and build out the Amazon ecosystem. It's in this spirit we'll look at three reasons for investors to love Amazon in the year ahead.

New hardware enables Amazon to sell more services
Unless you've been living under a rock, you know Amazon recently released its Fire TV device for streaming video content. This sleek gadget costs $99. However, for the e-tailer, it's not about hardware sales, but rather selling more digital content to consumers. With Fire TV, users get instant access to over 200,000 movies and TV shows not only from Amazon Instant Video but also from third-party apps like Netflix and ESPN. 

Moreover, with innovative features like voice-activated search and Advanced Streaming and Predictive controls, Amazon's Fire TV should give Apple (NASDAQ:AAPL) TV a run for its money. Fire TV is the same price point as Apple TV, yet unlike with Apple's device, users often won't need to wait for video content to buffer or load. That's because Amazon's gadget uses ASAP, or Advanced Streaming and Prediction, so that your favorite shows or movies are ready to view as soon as you push Play. 

Apple currently dominates the U.S. streaming device space with 43% market share. However, that could change now that Amazon has its own hardware available for connecting consumers with Amazon's growing media ecosystem. 

Prime price hike helps Amazon control costs
Another reason investors should love Amazon these days is the company's recent announcement that it will now charge $99 per year for its Prime subscription, up from $79 a year. This may not seem like a lot to pay from a value standpoint because you're getting unlimited free two-day shipping on millions of products, as well as unlimited video streaming of 40,000 movies and TV shows and access to free e-books from Amazon's Kindle Owners' Lending Library. 

However, for the e-commerce giant, increasing the cost of Prime by just $20 should help Amazon better control costs going forward. Rising shipping costs continue to weigh on Amazon's bottom line. In fact, delivery expenses swelled 19% to a whopping $1.21 billion in Amazon's fiscal fourth quarter. 

Nevertheless, Amazon reportedly has more than 20 million users paying for its Prime service today. Therefore, even this modest price hike of $20 per member, per year, could add upward of $400 million to the online retailer's bottom line.

Fresh thinking has consumers turning to Amazon while offline
AmazonFresh, the company's grocery delivery service, provides consumers in Southern California, Seattle, and San Francisco with same-day and early-morning delivery of fresh groceries, everyday essentials, local products, and items from Amazon.com. The service may only be available in select markets today, but its new Dash device is making headlines around the world. Amazon Dash connects to a customer's home Wi-Fi network so they can scan the barcode or speak the name of grocery items into their Dash device. These items are then added to a list in their AmazonFresh account. 

Screen Shot

Source: Amazon.com.

Amazon's new Dash device now makes it even easier for AmazonFresh subscribers to create shopping lists without having to log in to the service online. While some analysts view the device as gimmicky, I believe this is a smart way for Amazon to get more customers to make more Amazon purchases. It's also another example of how Amazon is building out hardware (think Fire TV) that basically acts as point-of-sale devices for customers to access and buy everything from groceries to e-books faster than ever.

Profits in the making
Together, these three things are making it faster and more convenient for people to make purchases within the Amazon ecosystem. Down the road, this should help Amazon steal market share from competing media ecosystems such as Apple's. After all, we're already seeing Amazon make headway in the online streaming arena. In fact, Amazon's video-streaming usage has now surpassed both Apple's and Hulu's, according to research firm Qwilt. 

The technology that will ultimately transform retail
Nevertheless, Amazon isn't the only company rolling out impressive new gadgets that will transform industries. The plastic in your wallet is about to go the way of the typewriter, the VCR, and the 8-track tape player. When it does, a handful of investors could stand to get very rich. You can join them -- but you must act now. An eye-opening new presentation reveals the full story on why your credit card is about to be worthless -- and highlights one little-known company sitting at the epicenter of an earth-shaking movement that could hand early investors the kind of profits we haven't seen since the dot-com days. Click here to watch this stunning video.

Tamara Rutter owns shares of Amazon.com and Apple. The Motley Fool recommends and owns shares of Amazon.com and Apple. 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.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't 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.

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