Costco Wholesale Corporation (COST), McDonald’s Corporation (MCD): Investing in the Face of Obama’s Budget

Amazon.com, Inc. (NASDAQ:AMZN) is another one that is vulnerable to a cut in discretionary income. The company already operates on a razor thin margin – last year’s net margin was 0.19% – and anything that keeps people from spending will create a real challenge for Amazon. I’ve never been convinced that Amazon has a long-term plan to achieve a decent level of profitability in the first place and this won’t help.  Amazon.com, Inc. (NASDAQ:AMZN) is the flip side of the Apple Inc. (NASDAQ:AAPL) phenomenon — the company is held to an enormously forgiving standard.  Any other firm that reported a -0.09 EPS and a 2012 operating margin of 1.11% would have seen its stock tank hugely.  Instead, people seem to love it without reason.

Moving on

The safest bet is that the fight between Republicans and the President continues, and we will find ourselves without a new budget. But on the off chance that they do find common ground and entitlement spending is cut through a chained CPI plan, investors should be aware that the economy will find itself with a small, but very long term weight on its ankles. It won’t slow it down a lot, but the effects will pile up. A smart investor plans for such things.

Nate Wooley has no position in any stocks mentioned. The Motley Fool recommends Amazon.com, Inc. (NASDAQ:AMZN), Apple Inc. (NASDAQ:AAPL), Costco Wholesale Corporation (NASDAQ:COST), and McDonald’s Corporation (NYSE:MCD). The Motley Fool owns shares of Amazon.com, Apple, Costco Wholesale, and McDonald’s.