Amazon.com, Inc. (AMZN)

The classic category killer. In his funds, he is Long this company and Short the things that Amazon is killing, certain retailers, etc. Not a cheap stock at 28X enterprise value to EBITDA. It certainly has a lot of runway in front of it. They are getting involved in every vertical with respect to retailing. He is nervous.

Wait for a pullback. It has just gone over $1000. What usually happens with round numbers is that it stays there for some time, or it corrects back.

This is such an amazing juggernaut that he doesn’t know how you could value it. It doesn’t make any money, but seems to consume everything in its path, and dominates everything it touches. This is not what he would call a value stock, and in the general market correction, it would get beaten up. As long as it doesn’t get that, he thinks you are going to be okay.

He sees it continuing to get stronger and to dominate the market. The problem with the stock is that it is not very profitable, based on the numbers. It has a price based on anticipation of greater earnings. He finds the valuation too difficult to stomach.

He has mixed feelings on this. Valuation is quite high at 66X forward earnings, but it is still showing a 35% long-term growth rate. PEG ratio is about 1.9-2X, a little more expensive than what he likes. They are doing very well and dominating the North American online retail space. What is interesting is Amazon Web Services whose revenues are doing very well and accelerating. However, they could face some competition from very well capitalized players such as Alphabet (GOOG-Q) and Microsoft (MSFT-Q) down the road. Valuations are slightly above where he would like them to be.

They are definitely the disruptor. They are a wonderful company, but they are extremely expensive.

This is a tough one. They broke to a new high today on above average volume. This is a buy signal for him. It is hard to put a value on them. They benefit from the network effect. They are changing the landscape of retail.

The valuation is a bit rich. He looks at it every time it pulls back. The most interesting part of the story is the disruption they are creating. They have huge runway and huge advantages. Home renovation is a space that is relatively safe from AMZN-Q. He prefers to play AMZN-Q through the suppliers of equipment for warehouses.

Amazon (AMZN-Q), Shopify (SHOP-N)? Both are trading at high valuations. Shopify is not quite making money, while Amazon is making a small profit margin, but not much. This one is growing its top line in the low 20% range, and Shopify has 80% revenue growth. If he has 2 companies that are both overpriced, he is going to go with the one that is 80% versus the one that is growing 20%, so he would go with Shopify.

A very interesting company. Trades at a ridiculous multiple so there are a lot of expectations in the stock. They are growing their AWS cloud business exponentially and their retail business is the core retail business in the world. It is hard for so many other retailers to complete with them. They need to create the revenue. You have to expect a lot of volatility if you own this thing.

The proverbial story of valuation versus fundamentals. This is really a killer in its categories of online retailing and Cloud services. However, it is not cheap. You are looking at 25 to 28 times cash flow. They have a fair bit of growth to achieve in the next little while to come into that valuation. He would prefer looking at this in 2 parts, online retailing and Cloud services, so would suggest maybe looking at Microsoft, which has been growing its share in Cloud services. A cheaper stock and pays a dividend.

(A Top Pick Jan 26/16. Up 39.56%.) Likes the Amazon Echo with Alexis, versus Apple’s Siri. They also produced the movie, Manchester by the Sea. Also, announced that they just bought some cargo ships, meaning they are getting into freight shipping. They are crushing everybody.

Seasonality on this is very different than the average retail merchandising US company. He is not even sure of the seasonality. Looking at the technicals, the stock is going in the right direction. The longer-term trend is on the upside. The shorter term trend is still even stronger to the upside. On a relative basis, the stock is very, very strong.

The fact that it has made all these vast investments in infrastructure, they have very little debt. They continue to grow like mad. Moving into India and internationally. They may not be making any money because they are reinvesting the money in growth. It is hard to find good management that is fearless. In 2006, they were using an incredible amount of computer power. Decided to overinvest in computers, and rent out computer space, and are now the largest Cloud computer company globally. (Analysts’ price target is $945.03.)

Has a lot of respect for this company. There is no sharper entrepreneur that has done more in the last decade than Jeff Bezos. He is wiping out whole swabs of the retail space. On this one, don’t use PE, but instead use Price to Sales as a valuation. On that basis, it is far more reasonable.