Amazon.com, Inc (NASDAQ:AMZN)
You’d have a hard time finding anyone who’d make a case for Amazon as a value play — but I’m just one of those rarities, I guess! My favorite aspect with Amazon is that you get a blend of multiple businesses all under one roof. You get a class leader in consumer retailing, with its Internet-capable Kindle Fire e-reader leaving Barnes & Noble, Inc. (NYSE:BKS) in the dust. You get one of the most revolutionary cloud-service providers, with its EC2 virtual data center and S3 storage farm being the models other cloud providers often emulate. And finally, you get a company able to rival Netflix, Inc. (NASDAQ:NFLX) in content streaming. Amazon has the cash on hand to deal with rising content costs, and it’s been expanding its streaming influence overseas.
Amazon’s three consecutive quarterly EPS misses might scare off most investors, but I can see the light at the end of Amazon’s high-cost expansionary measures. With the company at 74 times forward earnings and with better than $7 billion in net cash, I continue to throw my support behind Amazon.
Dunkin Brands Group Inc (NASDAQ:DNKN)
Paying 25 times this year’s earnings might be considered a bargain for some of the aforementioned companies, but for Dunkin’ Brands, which is only expected to grow sales by 8% this year, it could be construed as a steep price to pay. I, however, see Dunkin’ in a completely different light.
Dunkin’ is capitalizing on all the key trends that are driving traffic into restaurants and coffeehouses. First, it’s offering its very own signature coffee blend, which creates an army of regular customers. It’s also been offering an expanded coffee selection in its stores, partnering with Green Mountain Coffee Roasters Inc. (NASDAQ:GMCR) to deliver self-labeled single-serve K-Cups to its customers. Finally, Dunkin’, while still sticking with its traditional doughnut business, has tweaked its menu options to include healthier food items that appeal to a broader audience.
The amazing aspect of the coffee market is that while we imagine a rigid box filled with dollars devoted to coffee spending, the market for coffee products is increasing rapidly, even domestically, allowing for coffeehouses like Starbucks Corporation (NASDAQ:SBUX) and Dunkin’ Brands to expand voraciously without stepping on each other’s toes. My suggestion is to “Keep on Dunkin’,” folks!
Foolish roundup
Now that I’ve shared five pricey companies I’d pay a premium for, perhaps you’ll share a company others have deemed as overvalued in the comments section below.
The article 5 Stocks I’d Willingly Pay a Premium For originally appeared on Fool.com and is written by Sean Williams.
Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.The Motley Fool owns shares of Cisco Systems, VMware, Amazon.com, Netflix, and Starbucks. Motley Fool newsletter services have recommended buying shares of Intuitive Surgical, Lumber Liquidators, Cisco Systems, VMware, Amazon.com, Netflix, Green Mountain Coffee Roasters, and Starbucks.
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