Amazon.com, Inc. (AMZN)

Closed at $331.21 and his model price is $92.48. The market is supporting Amazon. As long as they continue to innovate and to find new products, the market is willing to support the company in terms of invention and innovation. The downside is if something happened to Jeff Bazos, or the market demanded that they have earnings. This is an event risk.

(Top Pick Jul. 11/13, Up 20.25%) He continues to see secular growth with online retailing. 25% year over year revenue growth. You could own this as a proxy on online retail.

Great, great company. This is basically a company that created a business that had not existed before, but not a very profitable company. They keep talking about investing for the future, but that future never seems to come.

Google (GOOG-Q) or Amazon (AMZN-Q)? If she had to choose, she would pick Google. This is a great company for the consumer. They are investing in their business, but their operating margins are so thin. They have to keep investing in technology and build out their infrastructure. They offer some absurdly low prices to ship groceries and goods, which is good for the consumer, but as a shareholder, you are not really getting the benefit of all the top line they are making, because they are putting that back into the business.

As long as these types of companies don’t have earnings to support them, then you can imagine anything you want in the future. Your guess is as good as his. The problem starts to come if the company ever starts to earn money. In order to justify the price of this company right now, it would have to earn somewhere in the order of $30-$35 and it isn’t going to earn that for a long time to come. Knock yourself out, but be careful and don’t forget to take your profits every now and then.

A tough stock to analyze. 100 times earnings. At some point he will let it start to produce earnings. There are better choices out there.

As a value oriented investor, this is not one she owns. This company dominates the Internet retail online space, and this is a positive. This is a market that is growing. Growing their top line, but they are investing, investing, investing in the business so there is not a lot that falls to the bottom line, so the company is not making very much money so PE metrics is very high. If you are looking for yield and don’t have very high risk profile, this is not a name that you want to get into.

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.