Wednesday, May 18, 2016

May 18 Analyst Report (Technology) – Runzhong(Frank) Zhang

Technology

Apple
94.56   week change: +1.84 (1.98%)    
·      Shares of Apple Inc. rallied following news that Warren Buffett's Berkshire Hathaway has purchased a new stake in the technology giant. Apple's stock price closed Monday's trading session up 4 percent at $94 and helped the broader market to rally.
·      Apple Inc. had bought a stake in DiDi Chuxing Technology Co. for $1 billion.

Amazon   
697.45    week change: +23.5 (3.49%)   
·      Amazon.com Inc. Chief Executive Jeff Bezos on Tuesday promised more retail stores as well as new services for the company’s Prime unlimited shipping membership.
·      Amazon.com, Inc. (NASDAQ:AMZN) just lost a big-name shareholder in Ray Dalio’s Bridgewater Associates. 

Alphabet
721.78    week change: -3.4 (-0.47%)
·      Google said it would soon start selling a device called Home that will answer users’ questions and complete tasks for them, like scheduling appointments, playing music and sending emails. The device resembles Amazon.com Inc.’s popular Echo device.


Recommendations
Apple: hold, even buy more
·      Low P/E ratio, 10.52
·      Cheap in this period because of earning release. The market undervalues Apple
·      Still have competitive advantage, strong management
·      Good balance sheet, large amount of cash to make investment

Alphabet: hold
·      Monopoly in search engine field, stable income
·      Constant innovation, much potential

Alibaba: hold
·      Revenue, net income, profit margin goes up rapidly in these years.
·      Debt to assets ratio is low
·      Reasonable P/E ratio for a tech company: 18.51
·      Solid management and leadership
·      It has many products that are dominant in the Chinese market: Taobao, Alipay
·      Still has growth potential, expand business overseas, India.


Amazon: Sell
·      P/E ratio is too high: 287.11, market is frenzied over Amazon
·      Low profit margin for the online retail business

·      It is hard to say if the firm’s cloud computing arm, “Amazon Web Services” can bring huge profits, at least for now.

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