Each December, as we approach the end of the year we take time to look back over the past year and try to pick out the best stocks. These stocks are not always the ones with the biggest earnings, or the highest percent gain over the year… but instead companies that were able to reward their stockholders, satisfy their customers, and improve their overall business model.
For 2012, we believe the stock of the year is Amazon (AMZN).
Amazon’s CEO, Jeff Bezos, has been referred to as the next Steve Jobs. Taking a closer look at Bezos and his decision making process makes the comparison easy to understand. He has a charismatic way of leading the company he founded, and he puts more emphasis on taking over the world than appeasing Wall Street with quarterly earnings figures. Bezos understands that business is a long-term undertaking, and he seems to always make the right decision when it comes to building on Amazon’s already impressive footprint.
A few years back, Amazon was facing a similar problem to Barnes & Noble (BKS)… having a successful e-reader that was being left behind in an increasingly mobile world. Apple’s (AAPL) iPad and the legion of Google (GOOG) Android tablets were quickly taking over the world, and stamping out the need for people to carry around an e-reader.
Amazon decided to take the step to convert its e-reader into an Android tablet, as did Barnes and Noble, but the genius of Amazon was the decision to sell their Android Fire tablets at a loss. Critics were quick to point out how bad of a decision this was, but Bezos knew better. He knew that the real power of the Kindle was its ability to be a point of sale device. He was right, and Amazon’s share of the tablet market took off immediately.
While companies like Microsoft (MSFT) and Hewlett Packard (HPQ) have been unable to compete against Apple and Google in the tablet market, Amazon has slowly and surely been expanding its market share. Analysts at Pacific Crest, had previously estimated that the Kindle line would represent 11% of all tablet shipments during the year, but recently increased that estimate to 13%.