Amazon.com, Inc. (AMZN): An Underappreciated Growth Machine

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Amazon.com, Inc. (NASDAQ:AMZN) is a massive $115 billion e-commerce company that has managed to outpace the NASDAQ Composite by 180 percentage points over the last five years. Amazon started out in the book business, but now sells a multitude of products.

Separating Amazon from many of its tech peers is its strong balance sheet that houses no debt. Amazon’s advantages in the retail sector include superior margins when compared to conventional brick and mortar retailers. The e-commerce company has a strong international segment that has helped counter a moderate slowdown in the U.S. This international segment has seen double-digit growth year over year, thanks in part to Amazon’s introduction of new products in this arena.

Ken Fisher - FISHER ASSET MANAGEMENT

In layman’s terms, competition in the e-commerce industry is intense, so price differentiation is key. Thanks to Amazon’s sheer volume, it can capitalize on market share gains by offering industry-low prices. The tech company’s Kindle e-reader has been a key driver when it comes to expanding Amazon’s market in the hardware space, though it hasn’t made quite the dent that many bulls originally hoped. Interestingly, Amazon is one of Ken Fisher’s top tech bets (check out all Ken Fisher’s new picks here).

Being a pioneer in an industry can be great for the company, and a nightmare for analysts. With no perfect competitors, it is hard to judge Amazon on a multiples basis, but we at least attempt to compare other high-growth, top-notch Internet companies to Amazon for valuation purposes.

Top online companies that operate in high-growth markets include eBay Inc (NASDAQ:EBAY), Google Inc (NASDAQ:GOOG), Netflix, Inc. (NASDAQ:NFLX) and Yahoo! Inc. (NASDAQ:YHOO). eBay is one of Amazon’s closest competitors due to its online retail status. This online auction company has seen its stock pushed higher by 70% year to date thanks in part to its payment division PayPal. This should also be eBay’s key driver going forward, helping it meet its expected 5-year earnings growth rate of 14%. eBay is a pick that both billionaire Stephen Mandel and Jim Cramer love (see all of Cramer & Mandel’s picks).

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