What happened to the JB Hi-Fi’s share price?
Shares of JB Hi-Fi [ASX:JBH] burst out the blocks this morning punching through $30, and recording an early 6.78% rise in the first half an hour of trading.
What’s going on with the JB Hi-Fi’s share price?
JB Hi-Fi had a poor start to 2017, seeing its price creep up near $30 but then fall back to close out January around $27. Today, however, the stock exploded out of the blocks. It was the best initial performer out of all ASX 200 companies.
The major catalyst for this was their net profit spiking 16%, which the market has taken to happily. While year to date the company is only 7.8% higher, over the last 12 months it’s up more than 36% — a return most investors would be thrilled with.
What now for JB Hi-Fi Ltd?
An uptick in profits for the consumer electronics giant is a great sign for existing investors, and the company. The market loves to see financials where profits are up. But will it last? Now that JB Hi-Fi is over $30 does that signal a buy, or is it time to offload this old-school bricks and mortar retailer?
Well there’s one word that needs saying here: Amazon.
In fact we’ll repeat it to make sure you read it right. Amazon. We should really repeat it again and again, until you’re perfectly clear the US ecommerce giant is about to kick down the doors on the Aussie market.
You will likely hear from companies like JB Hi-Fi or Kogan that Amazon does not threaten them. But it does, and they should be preparing. They should be pumping every available resource into their companies, to be ready and competitive with Amazon. This is the single biggest threat to Australian retail, ever.
JB Hi-Fi’s results are great for your standard, average blue-chip investor. But be warned, they might not last when Amazon rolls into town full force. But fear not. Not all hope is lost. Even Amazon will struggle to compete with another kind of stock listed on the ASX — the kind of stock that mainstream investors will simply never see, or even consider adding to their portfolio. If you want to find out how to hunt down these kinds of stocks, find out more here.
Editor, Money Morning