$AMZN Trading at HIGH PE now. What is compelling enough to justify the current price? Long term, Short term

I  sold my position in AMZN for 2 reasons: 1) I thought I had too much money at risk for what might be small gains. And 2) thought I should take the profits  and use some of that money tied up in AMZN and invest in less priced, lower PE stocks that might have just as good appreciation. During the process of making that decision I struggled with the opportunity to make more off AMZN position and in the end decided the risk / reward was not there and I'd sleep better at night no matter what "experts" say about the stock moving to $150 - $170.00.

Can anyone help me understand why experts think this stock can continue it's climb with a PE of nearly 82 and price of $140.00  so I can evaluate.

Also - where does AMZN fit in the larger scheme of things -depending on how you look at it, AMZN  competes against WMT, BKS, BGP, and EBAY. (maybe I've answered my own question!) Your thoughts?

 

  

Reply:  hey there. amzn does a few things to justify it. first for a multibillion dollar company they stillhave good growth. 2. in these times the scale that they operate in lets them grow their business in the most trying of times. 3. business model- this company is setup for success from the way that the company is setup, they can compete with anybody on price and they are taking advanatage of numerous consumer trends. 4. most importantly the company is well run. It is safe to say that Jeff Bezos is one of the top 5 CEO's in the world and the best in the retail industry.

 

People always talk about "best of breed" well amzn is definatley the number one retailer in the world right now.  The PE is stretched but so is the market!  Over the course of years and years yes PE matters but it is totally irrevelant in what makes a stock run during the course of a month or even 6 months.

Reply: I was wondering the same thing about a few companies the other day. So I did some research...Mind you, I am a novice investor and I'm still learning, but here is my take on AMZN. 

I've learned, and feel free to correct me if I'm way off,  is if a given company has a low PE then that would infer that the market doesn't have confidence in that particular company's business plan and they don't see much room for growth. Now this could be because the market for their product is shrinking or their positioning could be horrible (among other things).  Conversely, a high PE could mean that the market see's future growth (as @Kunal00 mentioned) and/or they are well positioned in a growing market.  The interesting thing about Amazon.com is the wide range of services they offer. They're not only the largest online retailer, but they have dipped into areas like online mp3 services and the film industry. They have rolled out AmazonMp3, AmazonFresh (a grocery service) and have partnered with 20th Century Fox. The most compelling area they've ventured into, in my opinion, is cloud computing. They offer platform level and infrastructure level cloud computing services (Amazon Fexible Payment Service, Amazon Mechanical Turk, Amazon SimpleDB, Amazon S3, Amazon SQS, etc... Checkout http://aws.amazon.com/). These are systems behind applications such as Facebook, Twitter, Youtube, Google Apps, etc... now I'm not saying they are powering these particular apps, but what they are doing is evolving these technologies and quickly becoming the leader in this area. They are establishing themselves as the "go to guy" for these technologies and are offering it to small and large businesses. They are taking on Google, Apple, and Microsoft and they are putting up a good fight. So when you think of Amazon.com you need to try to realize how far reaching they are. We only see Amazon.com, but they are much more than just an online retailer.

That's just my opinion, but who am I? 

 

The sales on Kindle are nothing short of amazing.  I'm not even referring to the device sales, more referring to the book sales.  

 

Imagine if there was a more interactive tablet, with a publishing model for publishers, and all types of product sales, including music.  Imagine if that tablet grew with the sales of the Iphone, as it piggy backs off the same single connection. To me that could be a potential game changer in the consumer electronics space.  I think the Apple tablet could be this and then some.