Last week was rough and this causes people to bargain hunt. You should look at the stock’s price tag along with considering the company’s fundamentals. Because everyone shops for damaged stocks you should know the right way to do it otherwise you could end up loosing money.
A stock that has been beaten up and a stock you should not buy is Amazon.com Inc (AMZN). The stock is cheap but not worth buying. A damaged stock should be compared with five other stocks in a similar business. AMZN sells a lot of merchandise but at heart they are a bookstore. As such, compared to Borders Group (BGP) and Barnes and Noble (BKS), AMZN is expensive. AMZN is a $14 billion company and too big to be a takeover target, also they sell at 44 times earnings. BGP is a $1.1 billion company and sells at 12 times earnings and BKS is a $2.2 billion company and they sell at 15 times earnings. When looking to growth AMZN is not cheap either. Jim said that this stock needs to be trading at half of where it is right now.” They are damaged because they fail to expand business beyond selling books. You should stay away from AMZN and BKS may be too cheap. Jim told us that BKS will report a bad quarter so when they do you should look to buy the stock.