Investors Look For Stocks That Won’t Be Hurt By Amazon

Amazon’s disruptive nature, which has left retail stocks in the doldrums, is prompting fund managers to pinpoint areas that won’t be hurt by the eCommerce giant down the road.

According to a news report in Reuters, some of the areas that fund managers don’t think Amazon will have an impact in include restaurant chains, recreation vehicle makers and sellers of products that are too heavy for Amazon to ship.

At the same time, some fund managers think the only option if they want to increase consumer spending is to invest in logistics and supply chain companies. With the latter strategy, they are betting that — thanks to eCommerce — most consumer-facing companies will become obsolete, noted the report.

At a time when consumer spending is increasing, the normal way to make money would be to invest in these stocks. But Amazon’s dominance is showing in the prices of these stocks. Consumer stocks are up 5.2 percent so far in 2017, which is around three percentage points under the S&P 500. Meanwhile Amazon’s shares are up 30 percent. Currently, Amazon represents around 34 percent of all online sales in the U.S. That is expected to increase to around 50 percent by 2021, noted Reuters, citing a Needham research note.

“I’ve been in this industry for 25 years, and this is the biggest transformation we’ve seen in the consumer space,” said Barbara Miller, a portfolio manager at Federated Kaufmann Fund, in the report.

Although there are some parallels between Walmart’s rise a few years ago and the resulting closing of mom and pop stores, Amazon is bringing down national retailers that are huge in comparison, including Target and Macy’s.

Given the fact that Amazon is expanding its reach in the world of eCommerce — and even offline with acquisitions like its deal to purchase Whole Foods — it may only get worse, since more people are shopping online than in years earlier.