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Amazon Is Leaving a Path of Destruction — Doug Kass Reveals His Top Survival Picks

* Opportunities are being created

"Buy at the sound of cannons? If the overall market corrects, as I suspect it will over the next few months, the more traditional brick-and-mortar retail stocks likely will fall back into the bargain bin and could provide a profitable entry point ... The disintermediation of old-line, bricks-and-mortar retailers provides longer-term opportunities for those who buy the right companies at reasonable prices."

--Kass Diary, "How to Profit From Shifting Retail Distribution Channels," January, 2017

The performance of retail stocks on Monday can be described in two words: a debacle.

My hopefully reasoned analysis is that the long-awaited capitulation phase (predicted above back in January) is upon us, out of which may result unprecedented opportunities for the bold investor with a long-term time horizon.

As usual, the principal cause is the broad reach and market impact of Amazon (AMZN) , which is part of the Trifecta Stocks portfolio. There are a number of subplots on this theme. Here they are in more or less chronological order. Readers can assume their own factor weightings as to relative import:

  1. AMZN announces it is increasing its apparel efforts, introducing several private labels and inking distribution deals with most major apparel sellers.
  2. AMZN announces it is buying Whole Foods (WFM) . Big trouble for food retailers. AMZN does not detail its plans to go into food retailing, a far different business than general merchandise due to the need to invest in multiple temperature warehouses and the more rapid stock turn. At last look, food retailing was very capital intensive. (Alliance Bernstein's research brokerage subsidiary discovered that Costco (COST) generates most of its sales from food and reasoned it was in the way of AMZN. In broker speak: sell.
  3. AMZN announced it was going into services, especially "Smart Home" where it will use its Alexa and Echo products as cornerstones of its efforts. This intersects to some extent with Best Buy's (BBY) services division (Geek Squad), which currently generates about 5% of BBY's profits. Lost...

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