2 Corporate Titans Resisting Definition: Will Tomorrow's Mega-Companies "Do Everything?"

Wal-Mart and Amazon.com used to have straightforward business models -- not anymore. Supervalu shares retreat after Wednesday's surge

Apr 24, 2014 at 6:34PM

Getting mixed signals from today's economic data, stocks wavered on Thursday, uncertain of which way to go. In fact, the Dow Jones Industrial Average (DJINDICES:^DJI) never entirely made up its mind, ending exactly sideways: It began and ended the day at 16,501. Durable goods orders improved markedly last month, topping expectations and painting a picture of a strengthening manufacturing sector. Jobless claims spiked without warning last week. It's no wonder Wall Street was confused. 

As a handful of corporate giants enter into new lines of business with the intent to stimulate growth, the way we classify these diversified conglomerates is getting muddied, as well. Dow mainstay Wal-Mart (NYSE:WMT), for instance, which added 0.4% on Thursday, recently made waves by announcing it would buy and sell used video games, a revelation that sent Gamestop investors briefly scrambling for the exits. Then, last week, it caused Western Union shares to plummet, as Wal-Mart unveiled plans to deploy its own money-transfer service within its U.S. stores.

It wasn't too long ago that most consumers thought of Wal-Mart as simply a big-box retailer. But as competitors like grocery chain Supervalu (NYSE:SVU) can tell you, Wal-Mart has morphed into the world's largest grocer over the years, as well. Fifty-six percent of Wal-Mart's net sales in the U.S. last year were from its grocery segment. Supervalu shares tumbled 6.6% today, as cautious investors took some chips off the table after the stock jumped 11.5% on Wednesday. The company managed to eke out a profit last quarter, which delighted shareholders. That said, if Wal-Mart is able to lure customers away from Supervalu with its long list of additional in-house services, those profits won't last long. 


Amazon Fire TV, another option for video streaming. Source: Amazon.com

Amazon.com (NASDAQ:AMZN), Wal-Mart's sworn enemy and biggest direct threat, is also a jack of all trades. Just yesterday, the company announced a shocking, unprecedented deal with HBO to license some of its older content and add it to the video library of Amazon Prime members. It's even begun producing its own exclusive shows in an effort to go head-to-head with Netflix. Amazon stock surged 3.9% today in anticipation of its quarterly results after the bell. While margins are still slim, sales beat expectations, growing at a 23% pace last quarter, a remarkable feat for such a massive company. Amazon also has plans to get into the grocery market.

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John Divine has no position in any stocks mentioned. You can follow him on Twitter @divinebizkid and on Motley Fool CAPS @TMFDivine.

 The Motley Fool recommends Amazon.com, Netflix, and Western Union. The Motley Fool owns shares of Amazon.com, GameStop, and Netflix. 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.

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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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