Is Amazon a Dangerous Place to Invest Right Now?

With shares of Amazon (NASDAQ:AMZN) trading at around $249.66 is AMZN an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

C = Catalyst for the Stock’s Movement

Amazon has been one of the most fiercely debated stocks recently. We could cover many different variables, but this tug-of-war argument between longs and shorts essentially comes down to growth vs. value.

We all know that Amazon has showed enormous revenue growth through the years. Actual profit hasn’t been quite as impressive. However, most investors look at growth above all other factors. The problem is that Amazon has an astronomical P/E of 2,969 and a Forward P/E of 141.71.

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The tricky part here is that Jeff Bezos is not someone you want to bet against. Think back to the 1990s when very few people believed in Amazon. Bezos had a tiny operation run out of a garage, yet he informed everyone that Amazon would be largely successful. He never quit because he believed so much in what he was doing. There are very few people with this type of determination, but they’re out there.

Okay, nice story, but the past doesn’t mean much to you as an investor today, right? The current goal for Bezos is for Amazon to take over the technological world. That’s kind of scary if you’re thinking of it in a T2 kind of way (Amazon recently bought Kiva Systems for its robots.) Let’s not get into Doomsday mode here, though. We have seen enough of that online recently. The point here is that Bezos is a winner. He might put his employees through hell in order to win, but investors only care about the bottom line.

So far, we have looked at some good news as well as some bad news. Now let’s take a look at some numbers, which always help tell the real story.