Amazon.com, Inc. (AMZN)

You cannot look at this one on a P/E basis as management has no interest in creating any earnings. They take every dollar that comes in and throw it back into reinvestment and spend the money for some future benefit. Instead of P/E look at Enterprise to EBITDA. You almost have to have faith that at some point, this company is going to own the retail world and it is going to be a flood of success through cash flow dividends, earnings, buybacks, etc. No one knows when this will happen. He would rather watch from the sidelines and take something that is a little more understandable.

Being retail oriented it has a seasonal move. This is one of those stories that it is a great company with a lot of expansion ahead of it. However, the stock is more than reflecting this. If they deliver everything that they are expected to, you could find the stock trading at these levels 5 years from now. Great story. They are dominating their categories. However, valuation is too high.

They don’t care about free cash flow or earnings, they just care about putting everybody else out of business and growing the amount of products that they have and reinvesting. This is an untested model and we’ll see what happens going forward. Trading at an obscene multiple. Spending all their cash flow and if there is a downturn, he doesn’t know what will happen. Not for him.

He understands the business model and he understands the attraction. It is not like an Apple (AAPL-Q) where they have to continually reinvent new products. As their exposure grows, their business will grow and earnings will eventually come through. He just doesn’t understand the valuation of 100X earnings.

It’s riding high. Not a stock you want to short. A momentum stock. 100 times PE. Probably for other investors but not for his clients.

Web based consumer discretionary are doing the best of the sector. You buy their dominant position.

Believes that you buy the leader in an industry if you want to participate. In retail, the high growth area is web based retail. They are in hardware with their Kindle as well as cloud computing but their main business is retail. Compound annual growth rate over the last 5 years of 30% a year. Going forward it will grow at about the same rate. The big knock has been that they have spent money to become dominant and the risk is that they continue to spend too much money. Current estimates are that they earn $3 a share.

The growth of this company is 20%. Would not like to be in a business they go into. Management is just a machine here and have created what will be a global $100 billion company in the next 5 years. The PE is over 200.

He always looks for the leaders and the strongest ones in the group. Retail has been underperforming in many ways but the Internet retailers are doing particularly well and this is one of the strongest stocks in the group. The relative strength is stronger than 86% of stocks in the current market. Revenue growth has been very strong.

Reporting earnings tomorrow and it will probably be volatile. Very expensive trading at 21X EBITDA. Phenomenal business. Stealing trade from traditional businesses.

A bit too frothy. Has a P/E ratio that doesn’t even fit on his screen. Fantastic business and he loves dealing with the company and are a leader in their field but P/E ratio is very high. Not sure this is a reasonable price. If you own, it would make sense to take some profits.

Hit a brand-new high today so certainly the momentum is behind the stock. Extremely expensive at forward PE of 180 times. Growth rate is very strong at 30%-40%.

As a company, they are taking over the world. They are selling more and more goods. Having retailers online. Revenues are amazing. Incredible management team. However, the stock is trading at nosebleed valuation and has for a long time.

(Market Call Minute.) This is a company that continues to impress him. The only drawback is that right now retail sales, etc. Buy on a pull back.

(Market Call Minute.) Very expensive and no earnings support.