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Amazon Is Not The Only Name In Online Retail

When investors think about online retail stocks, certainly the first name that comes to mind is retail behemoth Amazon (NASDAQ: AMZN ). Not only has it surpassed brick-and-mortar competitor Wal-Mart (NYSE: WMT ) as the largest global retailer, but in the growing world of online retail, it holds approximately a quarter of the market share . Amazon will report its first quarter earnings on April 28th after the close. Amazon had a streak going of beating earnings until last quarter when it missed analyst expectations by 38%. Going into this quarter, it faces many of the same issues. The company is heavily reinvesting into business: partnering with Air Transport Services Group (NASDAQ: ATSG ) to boost shipping and logistics, buying content for its newly announced stand-alone streaming video service, and investing in new devices such as the Echo. Despite its position as a market leader and its bright growth prospects, as an investment, Amazon stock is down more than 8.5% YTD versus a positive return of 2.5% for the S&P 500 Index. Thanks to an uncertain earnings outlook coupled with a premium P/E ratio of more than 500X earnings, Amazon has failed to beat the market this year. Fortunately, Amazon is not the only name to play in the online retail space. EQM Indexes launched its Online Retail Index ((IBUYXT)) on December 1, 2015. The Index is now being tracked by the Amplify Online Retail ETF (NASDAQ: IBUY ), which launched on April 20 of this year. The index is comprised of a basket of global companies involved in three primary market segments: online retail, online marketplace, and online travel. The index is NOT capitalization weighted which allows equal exposure to other companies in the industry. The Investment Case for Online Retail Almost everyone has purchased merchandise online. Ecommerce is the fastest growing segment of retail sales. Global online sales are expected to grow 117% by 2018 . So as an investment theme, you can make a strong argument that online retail is a good place to have exposure. Online retail exhibits strong growth characteristics, continues to gain market share relative to brick-and-mortar retail, and is expanding globally. Thanks to advantages such as competitive pricing, shopping convenience, greater product selection, and rapid delivery, online commerce appears to be a disruptive technology that is here to stay. The mall isn’t dead, it has just moved online! Other Names in Online Retail Looking at the year-to-date performance of the stocks within the EQM Online Retail Index, Amazon is not even among the top-ten performers. Indeed, many of the top-performing names are companies that 1) US investors only have limited access to, OR 2) are names that they may not be familiar with. Let’s start with the top-performing name in the Index this year aptly named Start Today ( OTCPK:SATLF ), a Japanese e-commerce apparel retailer. The stock, which trades locally in Japan, but also as a U.S. ADR, is up more than 29% on a US dollar basis this year. Online retailer Overstock.com (NASDAQ: OSTK ) is also up more than 24% this year, after posting strong Q4 results in February. Also up in excess of 23% this year is Canadian-based Shopify (NYSE: SHOP ), a leading cloud-based commerce platform designed for small and medium-sized businesses. Clearly, Amazon stock is not the only game in town! Online retail offers a diverse and global set of opportunities. Indeed, retail is not the only industry that has been transformed by online commerce. Online travel has almost put travel agencies out of business by democratizing the price and availability of travel and vacation options. Besides U.S. names in the online travel space such as Priceline (NASDAQ: PCLN ), Expedia (NASDAQ: EXPE ), and TripAdvisor (NASDAQ: TRIP ), there are many global players that have delivered strong growth and investment performance. Makemytrip Ltd. (NASDAQ: MMYT ) is an India-based online travel retailer that allows travelers to research and plan trips. One of the key strengths of online commerce is that it is not limited by geographic boundaries. While Makemytrip may cater to specific demographics, its offerings are available around the globe. The stock is up 8.9% YTD. So just like ecommerce offers broad access to all types of merchandise, owning a basket of names in online retail offers diversified exposure to this attractive thematic opportunity. That is not to say that all performance is rosy in online-retail land. Chinese online beauty retailer Jumei International (NYSE: JMEI ), online jewelry retailer Blue Nile (NASDAQ: NILE ), and UK food delivery service Just Eat Plc ( OTC:JSTLF ) are all down in excess of 20% this year as they have struggled to execute. Expect more consolidation in the online retail industry, especially in online travel, as the stronger players gobble up their smaller competitors. Expedia acquired competitor Home Away last December in the online travel space. And Japanese travel booking site Ikyu was purchased by Yahoo! Japan in a deal that closed in February . What about other retail ETFs? Interestingly, while other retail sector ETFs offer broad exposure to traditional retail, their exposure to ecommerce and virtual retail is extremely limited. Look at the limited exposure among retail and internet ETF offerings. ETF Ticker # of Online Retail Stocks % Weight AMZN % Weight Non-US? Consumer Discretionary Select Sector SDPR Fund XLY 5 17.17 11.25 N SPDR S&P Retail ETF XRT 12 11.35 1.17 N PowerShares Dynamic Retail Portfolio PMR 1 3.03 0.00 N Market Vectors Retail ETF RTH 2 19.50 14.95 Y First Trust Dow Jones Internet Index Fund FDN 7 30.55 10.18 N as of 12/31/15 Furthermore, most of these ETFs are U.S. focused and fail to offer exposure to the many non-U.S. companies that are innovators in the space. Conclusion In summary, there are many reasons investors should want exposure to a globally diverse basket of stocks focused on online retail sales, rather than owning just a name or two: Get diversified investment exposure to the fastest growing global segments of online commerce: online retail, online marketplace, and online travel Participate in the accelerating growth potential being fueled by trends such as mobile growth and user-interface innovation Gain access to online retail growth opportunities outside the U.S. At the end of the day, the universe of opportunities is broader and more diverse than just Amazon. Disclosure It is not possible to invest directly in an index. Exposure to an asset class represented by an index is available through investable instruments based on that index. EQM Indexes does not sponsor, endorse, sell, promote or manage any investment fund or other investment vehicle that is offered by third parties and that seeks to provide an investment return based on the performance of any index. EQM Indexes makes no assurance that investment products based on the Index will accurately track index performance or provide positive investment returns. EQM Indexes is not an investment advisor, and makes no representation regarding the advisability of investing in any such investment fund or other investment vehicle. A decision to invest in any such investment fund or other investment vehicle should not be made in reliance on any of the statements set forth on this website. Prospective investors are advised to make an investment in any such fund or other vehicle only after carefully considering the risks associated with investing in such funds, as detailed in an offering memorandum or similar document that is prepared by or on behalf of the issuer of the investment fund or other vehicle. Inclusion of a security within an index is not a recommendation by EQM Indexes to buy, sell, or hold such security, nor is it considered to be investment advice. Disclosure: I am/we are long IBUY. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article. Editor’s Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.

T-Mobile ‘Blowout’ Q1 Eases Worry Over Low-Credit Subscriber Base

T-Mobile US ( TMUS )raised 2016 subscriber and cash-flow guidance and reported Q1 revenue that topped views, sending shares in the Uncarrier-branded wireless service provider up. T-Mobile said it earned 10 cents per share in the March quarter, excluding the after-tax impact of a spectrum sale, in line with consensus estimates. T-Mobile reported a 9-cent per share loss in the year earlier period. Revenue rose 11% to 8.6 billion vs. expectations of $8.4 billion in sales. T-Mobile, controlled by Deutsche Telekom ( DTEGY ), has been gaining subscriber and revenue market share vs. Verizon Communications ( VZ ), AT&T ( T ) and Sprint ( S ) for over two years. T-Mobile’s Binge-on free video plan and other promotions in Q1 were expected to keep its momentum going. T-Mobile fell 0.8% to 40.86 in morning trade in the stock market today after rising 2% in premarket trading. T-Mobile rose 2.4% on Monday, hitting a six-month high and nearing the 8 1/2-year high of 43.43 set on Sept. 21. One overhang on T-Mobile stock has been concern that mobile phone financing plans support lower-credit quality customers and that a weakening economy would add company debt. Craig Moffett, an analyst at MoffettNathanson, says worries could be overblown. “T-Mobile’s blowout first-quarter results not only include falling bad debt, but also near record-low post-paid customer turnover,” said Moffett in a report. T-Mobile said it added 2.2 million subscribers in Q1, up from 1.8 million in the year earlier period. Prepaid subscriber additions jumped to 807,000 from 73,000. T-Mobile added 877,000 postpaid phone lines vs. 748,000 a year earlier. “Bad debt declined sequentially, highlighting efforts to improve credit policies,” said Mike McCormack, analyst at Jefferies, in a report. Verizon on April 21 reported Q1 results and said it lost 8,000 postpaid phone subscribers. AT&T reports Q1 earnings after the market close today. Bellevue, Wash.-based T-Mobile raised its 2016 postpaid phone subscriber forecast to 3.4 million at its midpoint of guidance, up from its earlier estimate of 2.9 million. “The net add guidance raise was not all too surprising, since the Street was already projecting 3.6 million for 2016,” said Jennifer Fritzsche, an analyst at Wells Fargo in a report. T-Mobile expects adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) to be in the range of $9.7 to $10.2 billion, up from the previous guidance of $9.1 to $9.7 billion.

Free Wi-Fi Can Cost You A Ton In Terms Of Lost Privacy, Security

This year, journalist Steve Petrow got his computer hacked while using the in-flight Wi-Fi service on American Airlines. He described the experience in a USAToday column, explaining that the hacker was another passenger aboard the plane who approached him at baggage claim. The hacker told the journalist he had read his emails on the flight, along with those of other passengers. The hacker, Petrow explained, wanted to show him what it was like to have his privacy violated, since Petrow had been writing about the Apple-FBI privacy issues. Point made. Indeed, when it comes to security, Wi-Fi can be trouble. Getting into data over a shared Wi-Fi network isn’t hard to do, says Josh Wright, a Providence, R.I.-based security consultant and author of “Hacking Exposed Wireless.” “When you join a Wi-Fi Network, and I can join that same network, I know that I can attack your computer,” Wright said. “And the Wi-Fi hot spot provider, whether it’s a coffee shop or whatever, really has no interest in providing additional security for you because that’s an added cost for them.” How Hackers Can Attack While Petrow’s hacker seemed to want to make a point about privacy, other hackers often have more nefarious plans: Gary Griffiths is CEO of iPass ( IPAS ), which offers a cloud-based service that helps people connect more easily and securely to Wi-Fi hot spots worldwide. He identified several ways hackers can invade your privacy when your Wi-Fi network is not secure. These include: Accessing and modifying your data without your knowledge, or that of the receiver. Capturing unprotected (unencrypted) data like passwords and user names to get access to your other data. Freezing up your computer and preventing you from using it. Assuming your identity (through your IP address), then modifying, rerouting or deleting your data. Inserting themselves into an online conversation and impersonating one of the parties to get information intended for someone else. “From a settings point of view, once data is leaving your computer and going into the air, it can be intercepted,” Griffiths said. “So unless you’re doing something to encrypt that data, it is vulnerable.” Mobile Wi-Fi Security Tips There are safer ways to get on Wi-Fi when you’re away from home, says Wright. For example, if you are doing work for a company and have access to its Virtual Private Network, be sure to hook into it. “VPNs provide a layer of protection between your computer and your workplace. So now all your data goes out to your workplace, instead of going out unencrypted. It offers an extra level of security,” Wright said. If you’re self-employed, it becomes harder because there’s no big company VPN to hook into. But there are options. Here are a few that Wright, Griffiths and other experts suggest: Check with the hot spot provider to see if the network is encrypted and password protected. Find out whether the apps or programs you’re using have any encryption or other protections. If not, and you have a phone with hot spot technology, consider using it instead of the free Wi-Fi. Granted, it could suck up costly data, so that decision might depend on your data plan, and how badly you need to use the Wi-Fi. Subscribe to your own VPN service. There are now many companies offering this service for monthly fees of under $10. Simply decide to not use the Wi-Fi, and wait till you get home to send sensitive information. Ways To Boost Protection At Home Once you do get home, you can do several things to keep your data safe. One of them, says Wright, is to make sure your wireless router’s encryption is set to the Wireless Protection Access 2, or WPA2, standard. Contact the manufacturer if you need instructions on how to do this. (Some have the instructions on their websites.) And don’t give the network password out to many people, such as to friends or extended family, says Wright. If you do, try to change the password at least four times a year, or just let everyone outside your immediate family use your guest network. It’s not protected like your home network, but people will have access if they want it. Also, make a backup of your data that is not connected to your computer, or even in the house. Wright says he backs up his family’s data (like photos they don’t want to lose) onto a separate drive and keeps that in a bank lockbox. Another option, he says, is to subscribe to a third-party backup service, if you don’t mind paying the fee. Alphabet ( GOOGL ) offers the Google Drive service, and other leaders in this area include Box ( BOX ) and Dropbox. On its website, the Federal Communications Commission shares tips for setting up your home wireless network to help ensure protection there. These include: Turning on the router’s firewall. Most routers are built with firewalls designed to filter traffic coming to your computer and protect you from online intruders. But these may be turned off when you buy the router. Change the default administrator passwords for setting the devices. These are different from the ones you use to access your wireless. Hackers may be familiar with the default admin passwords. If you’re not going to use your network for a long period, turn it off. Use anti-virus and anti-spying software on all computers connected to your network. When you’re back on the road with your computer, be sure to know the network you’re using. “So-called free Wi-Fi is hardly free if your personal information has been compromised, or your data has been intercepted,” Griffiths said. “It can be a pretty expensive proposition.”