Analysts spent the first few months of 2023 warning about an earnings recession. And so far, the data suggests that it’s here. Companies are slowing down overall. The good news? Analysts may have been too dour, so many companies have beaten the low expectations going into their earnings report.
Nevertheless, the next few months may see the market trade sideways and see a selloff as this latest earnings season starts to slow down.
Investors can use such a pullback to buy industry leaders at a reasonable price ahead of the next move higher. In this market, leadership is less about stock valuation and more about market share.
One leader is Amazon (AMZN). Best known for its online retail operations, the company is a diversified tech play with some fantastic growth in the cloud space – although that’s been the source of a big slowdown.
That may cause shares to give up some of their recent gains, and even potentially fall down to the low $90 range that marked the low for shares in the first quarter of the year.
Action to take: Patient investors should look to start buying shares under $100 to take advantage of any dip.
For traders, the September $95 puts, last going for about $4.50, offer mid-to-high double-digit returns on a short-term drop lower for Amazon shares.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.