Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

These 3 Charts Tell A Story, Are Investors Listening?, Inc. (AMZN)

Page 1 of 2

Before we get to any numbers, charts, of information, let’s establish one basic premise. Just because a company offers customers a great value does not automatically mean the stock is a buy. Investors have to understand that great businesses don’t always make great investments. Peter Lynch outlined this concept perfectly when he talked about companies from Polaroid to RCA, that were world famous brands, but the stock got ahead of the fundamentals. The stocks were bid up to many times their expected growth rate, but when their growth slowed, their stocks either went sideways or nosedived. I know some will say I’m crazy, but there are cold hard facts that suggest, Inc. (NASDAQ:AMZN) may be on the path to being one of these companies.

Let me get this out of the way first. I use Amazon, I have Amazon Prime, and my family bought a lot over this last holiday from Amazon. I’m not suggesting that Amazon isn’t a good business. What I am saying is Amazon is trading based on an investment thesis that is breaking down before our very eyes., Inc. (NASDAQ:AMZN)Why Are They Better?
Some of the most talked about reasons for buying Amazon stock is their efficiency, their push toward digital sales, and their huge sales growth. Many investors would scoff at the idea of buying Wal-Mart Stores, Inc. (NYSE:WMT) and their projected EPS growth of 9.2% in the next few years, when analysts are calling for over 41% EPS growth at Amazon. Even if you compare eBay Inc (NASDAQ:EBAY) and their 14.63% expected growth rate, it looks pedestrian compared to Amazon.

Amazon also offers digital content that eBay doesn’t participate in, and Walmart can’t match. Amazon offers the Kindle lineup, and Amazon Prime. Prime is a great hook for future sales, with fast shipping and a streaming video library that is beginning to rival Netflix, Inc. (NASDAQ:NFLX).

Why Are They Worse?
For each of Amazon’s strengths, their competition does a few things better. For instance, neither Wal-Mart nor eBay are projected to grow faster than Amazon, but both generate consistent free cash flow. In fact, while Amazon invests for the future, Wal-Mart generated more than $1 billion in adjusted free cash flow last quarter, or about $0.02 for every dollar of sales. EBay generated about $500 million in free cash flow, or an impressive $0.23 for every dollar of sales. Wal-Mart doesn’t have the huge fulfillment expenses because most of their sales are in store. EBay has a much higher margin business because they essentially help other people sell their wares. In the bigger picture, there are three issues facing Amazon today, and all three are getting harder to overcome on a quarter to quarter basis.

Page 1 of 2

Biotech Stock Alert - 20% Guaranteed Return in One Year

Hedge Funds and Insiders Are Piling Into

One of 2015's best hedge funds and two insiders snapped up shares of this medical device stock recently. We believe its transformative and disruptive device will storm the $3+ billion market and help it achieve 500%-1000% gains in 3 years.

Get your FREE REPORT and the details of our 20% return guarantee today.

Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.
Loading Comments...

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 102% in 3 years!! Wondering How?

Download a complete edition of our newsletter for free!