It is no secret that Amazon Prime Day is a big deal in retail. It may not be a new Valentine’s Day, but it is certainly yet another non-Amazon retail wrecker of a day. Many investors have tried and tried to figure out which companies can withstand Amazon.com Inc.’s (NASDAQ: AMZN) e-commerce onslaught. The web giant’s tentacles are almost everywhere, even in making its own consumer electronics, making its own private label consumer goods, online food ordering, and now Jeff Bezos is getting into organic groceries with the pending acquisition of Whole Foods Market Inc. (NASDAQ: WFM).
24/7 Wall St. has tried to consider companies and industries that are likely immune to the endless growth ambitions of Amazon. Some ideas have been promoted by Wall Street and some are original views. In order to qualify, a company has to touch millions of Americans every year. It also has to be implausible that Bezos would ever want to get into an industry or go after a company’s business segment.
While Best Buy Co. Inc. (NYSE: BBY) had fought back from being called Amazon’s showroom, now Amazon is looking to compete against Best Buy‘s Geek Squad. Costco Wholesale Corp. (NASDAQ: COST) had withstood the Amazon-ing of its business, but Costco may now be its next target. And Kroger Co. (NYSE: KR) and myriad big brand food companies might have some serious competition for already low margins now that Amazon is going after Whole Foods. Amazon is now even a big risk to the retail auto parts industry.
Again, picking consumer-focused companies immune to the mighty Amazon is no simple feat at this time. Amazon has massive knowledge about consumer behavior, not just from shopping habits but also from collecting cookies and viewing referral and landing pages after its customers leave the Amazon site. And Bezos seems to be awake all hours thinking of new industries that he can wreck. Even Amazon Restaurants has to be considered as disruption to a business model, even if it could actually be viewed as a win for some restaurants.
24/7 Wall St. looked at the consumer-facing companies, again those that serve millions of people per year. With news of Amazon’s brick-and-mortar stores, there has been talk and real progress over how Amazon could disrupt or enter much more targeted apparel, pet products, pharmacies, consumer goods, consumer staples, and so many other retail and consumer facing businesses. And with an Amazon Prime angle, there are many more aspects that the company can tackle at the expense of great American companies and industries.
To qualify as immune to Amazon, a company had to already have a market value in the multibillion range (all are larger). Each company had to have a fairly wide moat against a competitor deciding to open up next door or down the street, and each company needed to even have a defensible moat against emerging competition that Amazon Web Services might not easily disrupt with a far cheaper business model. Each company also had to have a solid track record and still had to have global room for growth. And finally, each Amazon-immune outfit had to have a Thomson Reuters consensus analyst target price that was higher than the current share price.
American Water Works Co. Inc. (NYSE: AWK) is the largest water utility in the United States, delivering water to over 1,600 communities and about 15 million people. You can have deregulation threats in electricity, but it is hard to get “competing water utilities” to households and businesses. Even if you get bottled water delivery, it eventually becomes cheaper to install your own water filters. And Amazon won’t be delivering your daily shower and multiple daily toilet flushes any time soon. Water has been immune to outside pressures as it is hard to replace that infrastructure even if a municipality opts for alternative water sources. At $77.75 a share, American Water has a 2.1% dividend yield, and its consensus target price is $84.50.
Carnival Corp. (NYSE: CCL) is the top cruise operator in the world. Even if Amazon gets into pricing of travel for referrals, Carnival has the right price points for travelers and it is the largest of them all. It claims to have almost half of the global cruising market share, with annual customers of 11.5 million and more than 225,000 people on any given day. Carnival’s fleet of about 100 ships has another 19 slated for delivery over the next five years. Carnival investors receive a 2.45% dividend, and with shares trading close to $65, the Wall Street consensus price target is $67.50.