Many Amazon (NASDAQ: AMZN) shareholders probably have two words in mind for 2022: Good riddance. Shares of the e-commerce and cloud-computing giant have plunged nearly 50% this year. It was Amazon's worst decline since the financial crisis of 2008 and 2009.
2022 hasn't been a fun year for Amazon (NASDAQ: AMZN) investors, whose stock is down 48% year to date. But the words of investing legend Warren Buffett, "be greedy when others are fearful," might ring true for those with a little bit of patience.
Oracle Corp posted better-than-expected quarterly revenue on Monday, driven by strong demand for its cloud software business as companies move to hybrid working models.
A 70-year-long effort to harness nuclear fusion reactions to generate unlimited clean energy is finally taking shape. For the first time in history, U.S. government scientists have generated more energy from a controlled reaction than it consumed. While the nuclear fusion industry is still private, there still is a great chance for retail investors looking to cash in on the breakthrough via Chevron (
NYSE:CVX
) and Amazon (
NASDAQ:AMZN
).
The breakthrough was achieved at the Lawrence Livermore National Laboratory last Tuesday after successfully simulating the solar reactions.
The net energy gain that the experiment achieved paves the way for an abundant supply of reliable, clean, and sustainable alternatives to fossil fuel. If regularly achieved, net energy gains can curb climate change (if not reverse it in the very long term), oil sector-induced inflation can be tamed, and the world can eventually be weaned off its dependence on fossil fuels.
Looking at this, it is safe to say that the "holy grail" of clean and sustainable energy has come within reach.
Now that we know how nuclear fusion will benefit the environment, let's shift our attention to the stocks that are very likely to enable the process to benefit investors' pockets.
Chevron (CVX)
One of the world's largest energy companies, Chevron, has made several significant investments in the area of clean energy. In this regard, the company started the Chevron Technology Ventures investment fund, which allocates its investments to several low-carbon energy resources. The fund presently has 10 investments in several innovative energy technologies.
The fund's investment in Zap Energy, a company that is developing nuclear fusion-related technology, can provide Chevron's investors significant exposure to this area. Moreover, its
investment plans in expanding its hydrogen capabilities also speak of its commitment to improving clean energy.
Apart from its investments in clean energy, Chevron's practical capital spending strategies and cost control measures can fuel solid long-term growth. Strong cash flow generating capability allows the company to up its oil production level, reduce its debt, and enhance shareholder value. Chevron is well-positioned to grow in the conventional oil and energy sector as much as it is when clean energy starts getting commercialized.
Is CVX a Strong Buy, According to Analysts?
Wall Street analysts, on average, think CVX stock can reach $188.08 over the next 12 months, a gain of 10.45%. Coming to what analysts think about the longer term, the consensus is still cautiously optimistic, with a Moderate Buy rating based on five Buys, six Holds, and one Sell.
Amazon (AMZN)
At first glance, Amazon seems to be an unusual choice of stock when it comes to the process of nuclear fusion. However, diving deeper, technology is a very intricately interconnected marvel; and being one of the biggest tech giants, very few technological advancements can escape Amazon's investments.
Companies dabbling in nuclear fusion directly are looking forward to creating functional reactors in the next few years. Although it's likely that nuclear fusion technology commercialization won't happen until the end of the decade, one of the industries that might be among the first to jump on the bandwagon is data centers.
Data centers run on high amounts of power because of the sheer volume of data that forms the backbone of tech. For that reason, data centers are found in less-populated areas and already have the infrastructure to support new generators; thus ticking two important boxes for placing a nuclear reactor (the phrase "data is the new oil" now makes sense).
Now, Amazon already has billions invested in its AWS data centers and is continuing to expand its footprint in this market. In this case, it will not come as a surprise if Amazon, given its remarkable resources, adopts nuclear fusion technology to improve its cost efficiency and revenues.
Is Amazon a Buy or Sell, According to Analysts?
Needless to say, Amazon is a Strong Buy on Wall Street, supported by 33 bullish analysts with a Buy rating and three cautious analysts with a Hold rating. Moreover, in the next 12 months, analysts see the stock price increasing to $140.50, 55.6% higher than current levels.
Takeaway: Chevron and Amazon May Benefit Significantly from Nuclear Fusion
It has been established that despite the recent breakthrough, nuclear fusion technology still has some time until it is widely commercialized. However, when it happens, Chevron, with its growing investments in clean energy, and Amazon, with its growing footprint in data centers, stand to gain massively from the proliferation of the new technology.
Disclosure
A 70-year-long effort to harness nuclear fusion reactions to generate unlimited clean energy is finally taking shape. For the first time in history, U.S. government scientists have generated more energy from a controlled reaction than it consumed. While the nuclear fusion industry is still private, there still is a great chance for retail investors looking to cash in on the breakthrough via Chevron (
NYSE:CVX
) and Amazon (
NASDAQ:AMZN
).
The breakthrough was achieved at the Lawrence Livermore National Laboratory last Tuesday after successfully simulating the solar reactions.
The net energy gain that the experiment achieved paves the way for an abundant supply of reliable, clean, and sustainable alternatives to fossil fuel. If regularly achieved, net energy gains can curb climate change (if not reverse it in the very long term), oil sector-induced inflation can be tamed, and the world can eventually be weaned off its dependence on fossil fuels.
Looking at this, it is safe to say that the "holy grail" of clean and sustainable energy has come within reach.
Now that we know how nuclear fusion will benefit the environment, let's shift our attention to the stocks that are very likely to enable the process to benefit investors' pockets.
Chevron (CVX)
One of the world's largest energy companies, Chevron, has made several significant investments in the area of clean energy. In this regard, the company started the Chevron Technology Ventures investment fund, which allocates its investments to several low-carbon energy resources. The fund presently has 10 investments in several innovative energy technologies.
The fund's investment in Zap Energy, a company that is developing nuclear fusion-related technology, can provide Chevron's investors significant exposure to this area. Moreover, its
investment plans in expanding its hydrogen capabilities also speak of its commitment to improving clean energy.
Apart from its investments in clean energy, Chevron's practical capital spending strategies and cost control measures can fuel solid long-term growth. Strong cash flow generating capability allows the company to up its oil production level, reduce its debt, and enhance shareholder value. Chevron is well-positioned to grow in the conventional oil and energy sector as much as it is when clean energy starts getting commercialized.
Is CVX a Strong Buy, According to Analysts?
Wall Street analysts, on average, think CVX stock can reach $188.08 over the next 12 months, a gain of 10.45%. Coming to what analysts think about the longer term, the consensus is still cautiously optimistic, with a Moderate Buy rating based on five Buys, six Holds, and one Sell.
Amazon (AMZN)
At first glance, Amazon seems to be an unusual choice of stock when it comes to the process of nuclear fusion. However, diving deeper, technology is a very intricately interconnected marvel; and being one of the biggest tech giants, very few technological advancements can escape Amazon's investments.
Companies dabbling in nuclear fusion directly are looking forward to creating functional reactors in the next few years. Although it's likely that nuclear fusion technology commercialization won't happen until the end of the decade, one of the industries that might be among the first to jump on the bandwagon is data centers.
Data centers run on high amounts of power because of the sheer volume of data that forms the backbone of tech. For that reason, data centers are found in less-populated areas and already have the infrastructure to support new generators; thus ticking two important boxes for placing a nuclear reactor (the phrase "data is the new oil" now makes sense).
Now, Amazon already has billions invested in its AWS data centers and is continuing to expand its footprint in this market. In this case, it will not come as a surprise if Amazon, given its remarkable resources, adopts nuclear fusion technology to improve its cost efficiency and revenues.
Is Amazon a Buy or Sell, According to Analysts?
Needless to say, Amazon is a Strong Buy on Wall Street, supported by 33 bullish analysts with a Buy rating and three cautious analysts with a Hold rating. Moreover, in the next 12 months, analysts see the stock price increasing to $140.50, 55.6% higher than current levels.
Takeaway: Chevron and Amazon May Benefit Significantly from Nuclear Fusion
It has been established that despite the recent breakthrough, nuclear fusion technology still has some time until it is widely commercialized. However, when it happens, Chevron, with its growing investments in clean energy, and Amazon, with its growing footprint in data centers, stand to gain massively from the proliferation of the new technology.
Disclosure
Warner Bros. Discovery WBD announced that it will be streaming Black Adam on HBO Max from Dec 16 after it faced disappointment at the box office.The movie, starring Dwayne Johnson, hit the theatres on Oct 21 and got off to a mild start with $67 million in the first week,
Apple AAPL recently announced that it is rolling out its HomePod minis globally in new countries. It will start selling Apple HomePod mini in countries like Finland, Norway and Sweden from Dec 13. The company will sell its HomePod mini in South Africa from Dec 19 and othe
U.S. companies are witnessing waning demand for their products and services as high inflationary pressure and rising interest rates have been hurting consumer spending. Moreover, the ongoing Russia-Ukraine war has further increased worries for investors about a global eco
Wall Street's main stock indexes were set to open higher on Monday as investors awaited inflation data and the Federal Reserve's policy decision later this week to gauge the U.S. economic outlook amid worries of a recession.
Few retail stocks are as popular as Costco Wholesale (NASDAQ: COST) these days. The membership-based warehouse retailer has put up strong growth numbers during the worst of the pandemic and in the recovery over the last year. It's fended off a challenge from Amazon, it's proven i
The Nasdaq Composite has nosedived into a bear market this year, as investors have become increasingly pessimistic about high inflation and rising interest rates, both of which threaten to tip the U.S. economy into a recession. But those concerns have hit Amazon (NASDAQ: AMZN) ev
U.S. stock index futures edged higher on Monday ahead of monthly consumer inflation data, while investors braced for the Federal Reserve meeting later this week.
Rivian Automotive Inc said on Monday it is pausing its joint venture with Mercedes-Benz Vans, just three months after the companies entered a partnership to make electric vans in Europe.
Pet e-commerce company Chewy (NYSE: CHWY) reported financial results for the third quarter of 2022 on Dec. 8 and the market loved it. The stock immediately rallied about 6% and has now doubled from its 52-week low.
C3.ai (NYSE: AI) has pioneered a brand-new industry known as enterprise artificial intelligence (AI). It breaks down the technical and financial barriers to accessing AI for many industries that wouldn't normally be associated with the advanced technology.
After capturing investors' hearts and wallets, Upstart Holdings shares (NASDAQ: UPST) now are down a breathtaking 88% in 2022, overturning its astronomical gains in 2021. It's on track to be one of the worst-performing stocks of the year.
You probably don't need me to tell you this, but it's been a miserable year for the stock market. Since each of the three major U.S. stock indexes hit their record highs between mid-November 2021 and the first week of January 2022, the Dow Jones Industrial Average has fallen 22%
Retail stocks have been under considerable pressure of late, thanks in part to mounting recession fears and lingering supply-chain issues. Consumer sentiment looks to be in a questionable spot going into the holiday season. Despite the numerous layoff announcements, inflation's impact on consumer budgets, and fading appetite for certain discretionary goods, retailers like Amazon (
NASDAQ:AMZN
) experienced their best Black Friday weekend ever. Walmart (
NYSE:WMT
), Target (
NYSE:TGT
), and Nike (
NYSE:NKE
) are worth watching as well.
Indeed, the consumer has been quite resilient. Heading into the holiday season, questions linger as to whether the Black Friday blowout will translate into better-than-expected holiday sales. In any case, many of us long for good deals following another year of price increases across a wide range of products.
As the focus shifts to the holidays and Boxing Day 2022, we could witness more bargain-hunters looking to stretch their dollar on nice-to-have discretionary goods. Whether consumer strength lasts into the new year is the million-dollar question. Regardless, the consumer could be key to softening the blow of the jabs the Federal Reserve is throwing at the economy with its rate hikes.
Amazon and Walmart: Retailers to Watch Going into the Holidays
All eyes will be on the retail behemoths Amazon and Walmart going into the holiday season. The two beasts are going into the period of seasonal strength from different angles. Amazon stock has been decimated this year, with investors turning against tech and growth stocks. Meanwhile, investors have warmed up to Walmart, with a growing grocery business that's continuing to pay dividends in the face of challenged consumer balance sheets.
As recession headwinds max out, retailers with greater discretionary exposure could outpace the resilient staples-focused retailers. Such a scenario makes AMZN stock a far better bet than WMT.
Still, it's hard to time when the retail tides will turn. At $148 and change per share, Walmart stock goes for a jarring
46.1 times trailing earnings. That's a high price to pay for a $392 billion retail behemoth that's not exactly on the cutting edge of e-commerce.
On the flip side, AMZN stock retains a lofty valuation (
83 times trailing earnings), even after shedding 52% of its value from peak to trough. Undoubtedly, Amazon Web Services (AWS) and other high-tech divisions make Amazon more vulnerable to the tech-centric valuation reset. Regardless, I do think it's a mistake to bet against Amazon, as it continues to expand its disruptive presence across the massive e-commerce industry.
Amazon's move into fulfillment could capture the hearts of smaller retailers, giving DIY e-commerce sites a harder run for their money. Indeed, Shopify (
NASDAQ:SHOP
) is one of the retail innovators that could feel the pinch.
I think the impressive Prime Day signifies that the consumer isn't ready to succumb to macro headwinds, and if the Fed can achieve a soft landing, a late-year 2023 economic rebound may very well be in the cards.
As for Walmart, the company is fresh off a quarterly beat ($1.50 EPS vs. $1.32 for Q3) and raise. Indeed, few firms have been able to raise the bar amid headwinds. Though Walmart is better positioned than retail rivals to tackle a more severe recession, I'd argue that a lot of the defensive characteristics are already baked in at these prices.
Target and Nike: Low Bars Make for Positive Surprises
Target and Nike have been pretty big losers this year,
both down about 33% year-to-date. Target's large discretionary mix hasn't done it any favors this year, as consumers flocked to firms with greater grocery exposure.
Top apparel maker Nike has also felt the heat, with supply-chain issues and demand concerns weighing heavily on the stock. Inventory climbed by 44% in the first quarter of Fiscal 2023. Though discounts will have a negative effect on margins, one has to have faith in the brand. Once the consumer is rich with disposable income again, Nike will be ready to jump higher.
Nike stock has already begun its climb out of its 54% peak-to-trough plunge.
At 31.6 times trailing earnings, though, Nike stock could still be at risk of further downside if next year's recession doesn't include a soft landing and swift recovery.
The Bottom Line
Retail stocks have been beaten down so hard as we head into the holidays. Though it's hard to tell when retail will be out of the woods, I'm a bigger fan of the valuations in the risk-on discretionary-centric names. They'll have more downside as a recession nears but more upside once the tides do turn.
Disclosure