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Peter Guba

Amazon: Your New Favourite Stock

It shouldn’t come as a surprise to anyone that Borders Group, Inc. (NYSE: BGP) is just working out the final details of their imminent bankruptcy filing. They struggled with intense competition from internet and discount retailers, their profit margins were almost non-existent, and as a result they were closing down stores at a record pace in an attempt to cut costs. Ultimately, Borders failed to realize and react to the widespread shift in consumer preference to buy things online and in digital format.So how can you trade on this bankruptcy? It is too risky to short their stock because as goes with bankruptcies, the common shareholders are the last ones to receive anything, and usually the stock is simply delisted from the stock exchange. Your best bet would be to either short their analogous competitor, Barnes & Noble, Inc. (NYSE: BKS), or buy one of the online retailers that were the cause to their insolvency —, Inc. (NASDAQ: AMZN).Over the past three years, Barnes & Noble’s annual profits have slid from $135.8 million to $75.9 million to $36.7 million. Barnes & Noble is really an identical twin of Borders Group Inc. in regards to the business model and even if it really needs to, it won’t be able to transform into a different company with the same investor base and the pressure of quarterly earnings. Unlike Barnes & Noble, Amazon is a great company, both structurally and strategically. Amazon’s low overhead costs, efficient inventory system, and well negotiated publisher contracts are difficult to match. They have grabbed an early advantage in an increasingly crowded digital marketplace and their considerable size now enables them to take advantage of economies of scale. However crowded, the online market is growing, consumers are shifting to buying physical books online or just e-books both… Read More

Las Vegas Sands: Like to Gamble?

That’s exactly the question you should ask yourself when making the decision to purchase this stock. I’ve personally owned Las Vegas Sands (NYSE: LVS) several times now, both through its upward and downward trends. With a beta¹ of 3.89, this stock will definitely test your character and risk tolerance. Las Vegas Sands is an international entertainment company that is largely known for its string of award winning casinos, most notably The Venetian in Las Vegas (USA), The Venetian Macao in Macau (China), and Marina Bay Sands in Singapore (Malaysia). Macau is currently the biggest casino gaming market in the Asia-Pacific region, with Singapore soon to become the second. In 2010, Macau generated a total of US$23.54 billion in casino gaming revenue, a 57.8% year over year increase, and based on the estimates of Pricewaterhouse Cooper that figure should increase by 30% in 2011 and double by 2014. To truly understand the magnitude of those revenue figures, you should also know that Las Vegas reported a meagre US$5.92 billion in casino gaming revenue for the year 2010, which was also not that far off from its pre-recession peak.Players from mainland China, whose real incomes have been on a constant upward slope for the past fifteen years, contribute some 75% of the casino gaming revenue in Macau. The average Chinese player is radically different from the typical American player, spending three times the amount on gambling and much less on entertainment and hospitality. The Chinese player considers gambling to be a form of business and steady income whereas an American player sees it as a form of entertainment. Accordingly, actual gambling revenue contributes to just 40% of total revenue in Las Vegas, as opposed to Macau where accounts for over 80% of the total revenue. Despite the near-perfect casino marketplace, Las Vegas Sands faces political… Read More