Stock price movements reflect investors’ opinions about a company’s worth; upward moves attracts investor interest because they indicates good performance. And while past performance doesn’t dictate future returns, it can shed light on which companies seem to be making the right moves. Well, here’s an analysis of three companies which moved more than 20% last year. These companies recently adopted different strategies like new product launches, expansions or new agreements to accelerate their future earnings:
| Company | Stock price movement last year |
|---|---|
| Amazon.com, Inc. (NASDAQ:AMZN) | 24.22% |
| Siemens AG (ADR) (NYSE:SI) | 27.02% |
| Gilead Sciences, Inc. (NASDAQ:GILD) | 94.23% |
Ad revenue and e-commerce growth will accelerate earnings
Amazon.com, Inc. (NASDAQ:AMZN) launched advertising on mobile devices last year through its mobile app, generating $610 million in revenue. The ads are displayed on Kindle tablets and Android-based phones with the Amazon app. The company has the upper hand in the ability to provide a database to advertisers, which its competitors, like Facebook Inc (NASDAQ:FB) and Google Inc (NASDAQ:GOOG), lack. This database includes shopping history and online searches made by the Amazon.com, Inc. (NASDAQ:AMZN)’s consumers, which helps advertisers post relevant ads to mobile devices. According to estimates, online advertising carries 20% to 30% profit margins, compared to 5% in Amazon’s core retail sales business. Therefore, Amazon is expecting to generate ad revenue up to $835 million this year. With such a high market potential, it is expecting to build up advertising on mobile networks to become one of its major streams.
Amazon.com, Inc. (NASDAQ:AMZN) has expanded its e-commerce market in nearly 170 countries. To accelerate its revenue, it launched Kindle tablets in developing countries like China, boosting its market share. In China, Amazon has a market share of 3% as of the first quarter of 2013. It has more opportunity to grow in this market as the company is expecting there to be 800 million Internet users by 2015, up from 538 million users at present.
The e-commerce market is estimated to be worth $700-$950 billion by 2015. Looking at this growing trend, Amazon.com, Inc. (NASDAQ:AMZN) is also shifting toward the developing countries of India and Brazil. It recently announced the launch of Kindle tablets in India at affordable prices. Amazon has a market share of 25-30% there, indicating large room for growth.
Cost restructuring and new contracts will boost revenue
Siemens AG (ADR) (NYSE:SI) was recently awarded a $1.3 billion contract from the government of Brazil to develop infrastructure facilities countrywide, as that country will host the 2014 FIFA world cup and the 2016 Olympic Games. Under this contract, the company will work on countrywide infrastructure development, which includes an airport, a stadium, streets, security, hotels, and even power plants. Siemens AG (ADR) (NYSE:SI) won this contract because of its capacity to turn around the overall economic development of the country with advanced technology and energy-efficient systems. Siemens is building an LEED Platinum stadium; LEED being a standard of eco-friendly construction. It is also building UAT Mauá 3 power plants to meet Brazil’s growing energy demands. These steps will reduce negative environmental impacts and build its efficiency. Siemens AG (ADR) (NYSE:SI) is expecting to raise its profit margin to at least 12% by fiscal year 2014 from this segment, which generated a $1.4 billion profit in fiscal year 2012
Siemens AG (ADR) (NYSE:SI), in order to focus in its core business, is now moving on a cost-restructuring program. This program includes the major move of selling its stake in Nokia Siemens Networks, or NSN, worth $9.3 billion, as the timespan of its partnership deed is terminated. The cost-restructuring plan also includes reducing costs up to $1.4 billion in its industry segment. This sector is the company’s major segment, which contributed $27.11 billion in fiscal year 2012.
Restructuring also includes a headcount reduction in Europe. This step was taken due to a dip in the European market, as Siemens already generates maximum revenue there. The company is expecting to save $2.64 billion by November 2013 through its cost-restructuring program, which is likely to be completed by 2014.
Two drugs will drive this company to new heights
Recently, the FDA granted a priority review to Gilead Sciences, Inc. (NASDAQ:GILD) for its Hepatitis C drug, Sofosbuvir. The drug is likely to receive approval in December 2013. Sofosbuvir helps to cure liver damage and is a treatment for patients with liver transplants. About 170 million people suffer worldwide from liver damage, 4 million of whom are in the US. Hepatitis C is an increasing cause of liver cancer in the US. The company added Sofosbuvir to its pipeline after the acquisition of Pharmasset in 2012 for $11.1 billion. It is estimated that after approval, the company’s annual sales could be $6.42 billion by 2017. The reasons of high estimation are Sofosbuvir’s high potential to cure liver damage, and its reduced therapy duration.
Stribild is the third medicine developed by Gilead Sciences, after Atripla and Truvada, to treat adults suffering from HIV. It is comprised of four other Gilead compounds. Stribild was launched in August 2012 in the U.S. market and contributed $92.1 million of revenue in first quarter of 2013, as compared to $40 million in the last quarter of 2012. Stribild is as effective as the other two medicines; since Gilead now produces two compounds used in Stribild which were previously outsourced, the drug’s production cost is now lower, thereby increasing profits. The company also received approval from the European Commission on May 29, 2013. It is expected that Stribild will be available on the European market by mid-2014. Gilead Sciences is expecting to generate revenue of $2.7 billion by 2016, as forecasts suggest the HIV therapeutics market will increase at a 7% compound annual growth rate from 2011 to 2018.
Conclusion
Amazon.com, Inc. (NASDAQ:AMZN)’s expansion in e-commerce and advertising through mobile apps will generate high revenues.
Siemens AG (ADR) (NYSE:SI)’s policy of cost restructuring and the big Brazilian contract for infrastructure development will accelerate its sales.
With the launch of Sofosbuvir and Stribild tablets by Gilead Sciences, Inc. (NASDAQ:GILD) to cure diseases like Hepatitis C and HIV, the company’s sales and market share look poised for growth.
All three of these stocks are a buy.
The article Why You Should Consider These Three Stocks originally appeared on Fool.com and is written by Shweta Dubey.
Shweta Dubey has no position in any stocks mentioned. The Motley Fool recommends Amazon.com and Gilead Sciences. The Motley Fool owns shares of Amazon.com. Shweta is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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