We all know that developing news, especially the unexpected kind, can move stocks strongly. That's why it is so important to follow the developing news of companies and ETFs that you follow. In this article, we look at some of the most important recent news for stocks and shed a light on what that news means for the companies involved. We will determine how the news impacts each company involved, and what it may mean for your investment moving forward:
Starbucks acquired a Costa Rican farm in an effort to begin to bring Higher end coffee offerings to their consumers. Starbucks hopes to be able to increase margins more by being able to offer specialty coffees much like how to wine industry operates.
Starbucks has seen serious gains from introducing new products to its customers. In 2012, their Channel Development increased revenues by 50% in FY2012 alone. It also acquired Teavana in an effort to expand into that growing market. Starbucks is poised to have 28.4% growth rate in comparison to the S&P 500, which is only projected to grow 6.4%. With this new acquisition, the growth could be substantially higher.
While the details of the deal are few, what is known is that Amazon could be building the CIA a private cloud network. This deal could be worth $600 million to Amazon. Such a deal would be a huge step for Amazon's cloud services.
Amazon is not known for its private cloud services. Private clouds are used for large enterprises that want the benefits of cloud computing but not the security risks. If Amazon enters the space, it would become a direct competitor to VMware (VMW) and Citrix (CTXS). And such a large contract would make a huge splash in the private cloud industry.
Amazon is also considering adding a streaming music service. While the talks with music industry leaders is very informal, it does point to an interest. Amazon clearly does not want to be left behind by Apple (APPL) or Google (GOOG), both of which are looking at streaming music services. Amazon could greatly benefit from such a move to attract subscribers to their Prime memberships.
Amazon is already looking at one year earnings growth of 240% but could see a negative growth rate in the next 3 to 5 years. The deal with the CIA, on the other hand, could be a game changer. It would bring in new revenues and open them up to an entirely new industry that has large growth potential. Also, if Amazon adds a streaming music service, it could bring in more subscription revenue and an opportunity to attract more customers to its marketplace. These two services could turn the earnings growth for the next 3 to 5 years positive. While a P/E ratio of 179.5x forward earnings seems high, Amazons potential growth could soon justify the valuation.
3. "Beltway Insider says 3D Printing is going to Revolutionary"
Jim Kohlenberger, a former White House chief of staff in the Office of Science and Technology, said that 3D printing is a "once in a generation" opportunity. 3D printing allows a machine to literally print out object that can be used in all sorts of applications. The technology world is abuzz about the possible applications of this new technology.Kohlenberger went on to say, 3D printing could be as impactful as the PC.
Evidence is pointing to this new industry exploding. Nike (NKE) has begun using it in production of its new line of shoes and GE (GE) is using it to build aircraft. Even Ford (F) is using it to build prototypes. The industry could reach $3.1 billion by 2016 and $5.2 billion by 2020. Stratsys LTD. (SSYS), is one of a handful of 3D printing companies that are publicly traded. Its PEG ratio is 1.65, which seems high, but if the technology is as revolutionary as advertised, investors could be looking at the beginning of huge paydays.
4. "Cyprus has until Monday to come up with a deal"
The ECB said that Cyprus has until Monday to come up with a deal. If Cyprus does not come up with a deal, the ECB will not provide Cyprus banks with liquidity for them to operate.
The whole bailout deal in Cyprus has been a ill conceived and executed plan. The bailout is sending more fears than confidence throughout the world markets . This bailout will continue to pull financials lower. Look for XLF, the financial SPDR ETF, to slide in response to the mess in Europe. The top holdings in the ETF are names such as JP Morgan and Bank of America. The ETF has returned 6.8% to investors but may see some rough days ahead.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.