Few companies have become so dominant or so diverse Amazon.com (NASDAQ: AMZN) in so little time. In just over two decades, Amazon has emerged as the dominant online retailer in just about every product category, while also establishing itself as one of the largest providers of cloud and video and music streaming services.
In many ways, Amazon is an excellent reflection of the US stock market; a massive consumer-focused company with a healthy dose of high growth technology mixed in. But it’s not the only stock that can do the trick. In the October 26 edition of “The Wrap” on Motley Fool Live, host Jason Hall asked Motley Fool contributor Brian Feroldi and analyst Emily Flippen to name an action do not Amazon is also very representative of the US economy.
Jason Hall: I want each of you. I’m going to have, Brian, you go first this time and let Emily go last. But give me a company that is most representative of the US stock market, and you can’t choose Amazon.
Brian Feroldi: Oh. It’s the stock market.
Feroldi: I thought it was the economy. Well, […] my answer i will just say Walmart (NYSE: WMT). Is there anything more American than Walmart? It’s these megastores that sell absolutely everything, and it’s been a tremendous achievement since its inception 60 years ago. At this point, it’s a $ 400 billion business. I think it’s a company with the most dollar sales at least in America, and maybe the world. No, probably just in the United States
But do you want to know how the American consumer is doing? You look at Walmart. It’s the American consumer society. His stock has actually performed very well over the past 10 years as it has rocked the narrative that Amazon is going to eat its lunch and it has successfully risen to become considered a viable No.2 in the ecommerce world. They also have the option to buy online and collect in store, and they’re basically copying everything Amazon does, just 10 years later. It will be a few more years before they get into cloud computing, I bet.
Room: Three things I’m going to tie in with this to make Walmart a pretty good representation. Our economy is driven by consumer purchases, consumer purchases, so economically, yes. But also consumer income, you think Apple, it is the largest company in America, the largest individual stock. They sell consumer products. It is a technology-based business.
There are links in there, but here is pretty much one. Think about it. Walmart has done a really good job of being adaptable. I think our stock market reflects very well companies that innovate and also think about health care. It’s a company that has spent a lot of money on bringing in more health products, their pharmacy services, their eye care, all that sort of thing. Not a bad choice. Emily Flippen, can you do better?
Emily Flippen: I don’t know if it’s better, but I can suggest an alternative solution. First of all, I laugh at Brian, feeling that he needs to change his answer because the terminology has shifted from economics to the stock market. Since when have the economy and the stock market diverged so sharply? That’s not really how it’s supposed to be, historically.
I actually think Walmart, whether you’re looking at the economy or the stock market, is a really solid answer. I will add to that. You mentioned Apple. Apple is also a great indicator.
I will probably say Microsoft (NASDAQ: MSFT) here, however. That’s a disturbing answer, however, because when I think of reflecting the stock market as a whole, not only is Microsoft in many indexes thanks to its size, but it’s in one of the biggest constituents of the world. S&P 500, which is widely regarded as the most accurate benchmark for individual investors. That’s what we’ve also compared here to the Fool for the most part. Microsoft itself is already considered a benchmark for the US stock market.
But they also reach many levels. They hit consumer consumption – they sell consumer products. But they also have this whole division of Azure cloud computing business and games that really makes it a well-diverse representation of the US economy itself. I don’t know if this is as strong a response as Walmart. I actually really liked Walmart as an answer, but [Microsoft] will be what I would go with.