Amazon.com, Inc. (AMZN) and Community Bancorp (CMTV) – Buy

    

Once again, I added more to my positions today in Community Bancorp (CMTV) at 15.75 and Amazon.com, Inc. (AMZN) at $1753.13.

Amazon is now my 3rd largest holding and Community Bancorp is my 4th largest holding. Rankings for top holdings are located here.

COMMUNITY BANCORP

I continue to believe Community Bancorp is a safe income investment. It’s pulled back a bit more since my previous purchases, the but the business continues to grow. Revenue, income, equity, book value all consistently growing. The dividend yield is currently 4.8% is great! 

While I’ll don’t see any huge gain in value of the shares, it’s a great place to put some money to produce income while minimizing risk to national or international risk factors being that it’s a very small local bank here in northern Vermont.

Valuation

  • PE of 9.6
  • PEG of 1.01
  • Price/Book of 1.3
  • Dividend yield is 4.8%

AMAZON

This follows up my purchase from last week to build up the position further.

Amazon was under more pressure earlier after their quarterly results and guidance disappointed some. The company is switching back to investment mode and should be seen as a long term positive. One Day shipping is proving to be expensive but will provide them more of an advantage over competitors. Growth in ad sales is going very well and they can use that to offset increased shipping costs.

It’s expected to be another record holiday sales year for e-commerce and Amazon will benefit.

Here is my previous analysis on both Amazon and Community Bancorp:

Facebook Inc (FB) – Buy

I added more to my Facebook Inc (FB) position today at $182.34 making Facebook my new 2nd largest holding.

The recent pullback makes for a good opportunity to add more or initiate a position. The valuation isn’t as good as it was last year, but it still has a PEG of around 1! It’s also trading under most of it’s averages.

Facebook is under continued pressure from the government due to size/ influence, role in protecting data and political speech/advertising. I believe the fears are overblown and this poses a good opportunity.

In most scenarios, the shareholders should continue to thrive. If the company should be broken up, then shareholders receive pieces of strong companies which could actually perform better independently on a share price basis. I feel there are good synergies with the company remaining intact, but it’s certainly not the end of the world and I think it’s unlikely. Most likely, there will be increased regulation which Facebook will most likely be involved in writing and they will have less problems working with. Any new regulation will make it worse for smaller competitors and perhaps scare new entrants into the industry. In effect, if more regulation is enacted and more responsibility placed on social media companies less entrepreneurs will want to be involved in the sector.

Facebook, Messenger, Instagram and WhatsApp still dominate the social media sector and Instagram is favored by Generation Z. We use Facebook a lot in our business and it has become one of the top tools to create awareness for products/services. It provided unprecedented access for anyone to markets they would never been able to access before. For as little as $5 you can target an extremely targeted niche within minutes. You combine Facebook advertising with some Google Ads and you’ve got a very powerful combination, which is what we do for many of our clients at Advantage Creations.

Here is a comparison of the interest over 12 months in some of the top social media platforms in the US:

Youtube is the biggest threat to Facebook which is why they have been making more effort into video with Facebook Watch.

My impressions based on my own spending and the increased aggressiveness I’ve seen of Facebook sales people to sell ads that revenue and earnings will be good with the next earnings report. It’s possible that with all the distractions and increased spending on content monitoring and legal issues that they don’t surprise, but I’m leaning more towards a positive surprise.

Here is my previous analysis: Facebook Inc (FB) – Buy

Amazon.com, Inc. (AMZN) – Buy

I added to my position in Amazon.com, Inc. (AMZN) today at $1,757.76. It is now our 3rd largest position at this time.

Most of the same reasons for my previous purchases still stand.

We did quite well selling products for our Wondermugs business on Amazon.com and have increased our advertising spending to get our listings rank higher in Amazon’s shopping searches.. We expect to sell significantly more mugs this year than last year.

Some overall threats to Amazon are:

  • Amazon.com’s will have more margin pressure from increased investment/competition from competitors such as Walmart, Costco, and Target.
  • International expansion holds no guarantee of matching success as the US Market
  • AWS is facing increased competition from strong competitors such as Google and Microsoft.
  • Government pressure due to size and influence.

However, the positives are:

  • Amazon.com dominates the overall e-commerce market with sizeable international growth opportunities for it’s marketplaces, advertising and devies
  • Strong growth in devices to help keep and bring in new customers.
  • Strong favorability with Generation Z.
  • Increasing number of shoppers initiating their searchers with Amazon instead of Google
  • Increasing advertising share and signups from 3rd party sellers on their platform, which helps the ability for Amazon to increase profits while reducing costs/burdens of selling inventory directly.

The stock currently trades at a PEG of 1.1 which is quite good and makes for a good buying opportunity.

Carrols Restaurant Group, Inc. (TAST) – Buy

Once again, I added more to my position in Carrols Restaurant Group, Inc. (TAST) today at $6.56 now making Carrols my largest position.

What I mentioned in the last post with my last purchase mostly still stands: (updated value per stored to $314k each)

The continued price drop is a great opportunity. The price drop is just making the company very cheap. At today’s price, the market is valuing the 1081 stores at only $314,000 each. To start a brand new store, you are typically looking at an initial investment of $1,200,000 to $2,800,000. These are mostly proven stores with excellent management in place.

The current price to book value is about half what it has averaged over the last 5-10 years. Carrols, is constantly increasing gross revenue and book value and future earnings potential while sacrificing short term net income, which I feel many investors are focusing too much on.

Adding the Popeye’s brand is also a great potential growth driver for the business especially with the popularity of the new new chicken sandwich. And Burger King’s Impossible Whopper seems to be doing quite well as well.

Some are thinking the economy is going negative. If that’s the case, people will still want to go out to eat. Carrols provides good food at great prices.

Here is my previous analysis: Carrols Restaurant Group, Inc. (TAST) – Buy

Carrols Restaurant Group, Inc. (TAST) – Buy

Once again, I added more to my position in Carrols Restaurant Group, Inc. (TAST) at $6.90 now making Carrols my 2nd largest position.

The continued price drop is a great opportunity. The price drop is just making the company very cheap. At today’s price, the market is valuing the 1081 stores at only $287,122 each. To start a brand new store, you are typically looking at an initial investment of $1,200,000 to $2,800,000. These are mostly proven stores with excellent management in place.

The current price to book value is about half what it has averaged over the last 5-10 years. Carrols, is constantly increasing gross revenue and book value and future earnings potential while sacrificing short term net income, which I feel many investors are focusing too much on.

Adding the Popeye’s brand is also a great potential growth driver for the business especially with the popularity of the new new chicken sandwich. And Burger King’s Impossible Whopper seems to be doing quite well as well.

Some are thinking the economy is going negative. If that’s the case, people will still want to go out to eat. Carrols provides good food at great prices.

Here is my previous analysis: Carrols Restaurant Group, Inc. (TAST) – Buy

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