3 Reasons to Buy Amazon.com Today

Historically, tumultuous times offer some of the best opportunities to buy stocks, and the market's recent mess surely qualifies. There are very few companies that investors believe will flourish in this economy, but many think online retailer Amazon.com (Nasdaq: AMZN  ) is one of them.

In our Motley Fool CAPS community, nearly 72% of the 4,267 investors rating the company are bullish, so there's no shortage of reasons why Amazon will thrive, three of which I've highlighted below.

But here at the Fool, we're all for looking at both the good and the bad sides of an investment. Once you're done with this article, you can read the case against the stock, weigh in with your own comments below, or rate Amazon yourself in CAPS.

1. Growth
While some bricks-and-mortar stores like Sears Holdings (Nasdaq: SHLD  ) and Macy's (NYSE: M  ) have struggled, Amazon has continued to perform well despite the economy. It's had strong Kindle sales and growing third-quarter sales and earnings, and some investors expect that strength to continue. Analysts have been raising targets lately, and some investors think the company's long-term potential outweighs the effects that competition is expected to have on margins.

2. Leg up on the holidays
Not only did Amazon top the charts as the most-visited website on Black Friday, topping the retail websites of Apple (Nasdaq: AAPL  ) , Best Buy (NYSE: BBY  ) , Target (NYSE: TGT  ) , and Wal-Mart (NYSE: WMT  ) , but also it scored the top spot on Cyber Monday. Overall online retail sales in the U.S. for those days grew over last year's numbers, and some investors believe that momentum will continue into the holidays and possibly further.

3. Cash, cash, and more cash
In addition to Amazon generating consistently positive free cash flow in recent years, its operating cash flow and free cash flow have skyrocketed for the trailing 12 months, even in the midst of a bleak retail environment. It's pulling in more free cash flow than its net income, and some CAPS members like potential opportunities that Amazon could take advantage of with its growing cash balance.

To see details of what CAPS members are saying now about Amazon, just click on over to Motley Fool CAPS and have a look -- or add your own thoughts directly to this story in the comments box below.

The Motley Fool Stock Advisor service looks for companies with strong management poised to beat the market over the long haul. To see all the stocks that have helped Tom and David Gardner beat the market by 49 points on average, take a free 30-day trial.

Fool contributor Dave Mock is looking for three justifiable reasons to splurge on a new GPS this year. He doesn't own shares of companies mentioned here. Apple, Amazon, and Best Buy are Stock Advisor recommendations. Best Buy, Sears Holdings, and Wal-Mart Stores are Inside Value picks. The Fool owns shares of Best Buy. The Fool's disclosure policy spent Black Friday in bed nursing a hangover.


Read/Post Comments (4) | Recommend This Article (4)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On December 04, 2009, at 6:01 PM, plange01 wrote:

    3 reasons to buy amazon....a terrible christmas season,its stock price way to high and the 11 month old depression in the US is getting out of control.3 great reasonsons to buy amazon- short.

  • Report this Comment On December 04, 2009, at 6:14 PM, mikecart1 wrote:

    AMZN is overpriced to the gills. Even Stevie Wonder can see this.

    Short it down to double digits - where it belongs.

  • Report this Comment On December 04, 2009, at 7:09 PM, greenwave3 wrote:

    While AMZN is a strong business and is growing at a time when businesses are suffering, AMZN stock is severely overpriced, with about 10 years of growth already built into the price. Take profits and buy back in under $100.

  • Report this Comment On December 04, 2009, at 8:13 PM, admill wrote:

    The author needs to get real on AMZN.

    Amazon.com is a retailer, pure and simple. Unlike AAPL and GOOG, what AMZN offers is no different from what WMT or TGT does. In tough times, people tend to go to online stores even for the same price items just to avoid sales tax. That gimmick triggers several States to enact sales tax amendments. There would be less and less bottom line price differences between AMZN and WMT.

    Cash flow? Give me a break, if you read their cash flow statement, the entire "cash" inflow from Operations is due to the increase in current liabilities. Therefore this is pure due to AMZN managed to delay paying their bills!

    I would recommend do some homework and not waste our time.

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