2-Star Stocks Poised to Plunge: Amazon.com?

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, online retail giant Amazon.com (Nasdaq: AMZN  ) has received a distressing two-star ranking.

With that in mind, let's take a closer look at Amazon and see what CAPS investors are saying about the stock right now.

Amazon facts

Headquarters (Founded) Seattle (1994)
Market Cap $113.9 billion
Industry Internet retail
Trailing-12-Month Revenue $54.3 billion
Management Founder/Chairman/CEO Jeff Bezos
CFO Thomas Szkutak
Return on Equity (average, past 3 years) 14.7%
Cash/Debt $5.0 billion / $0
Competitors Apple
eBay
Wal-Mart

Sources: S&P Capital IQ and Motley Fool CAPS.

On CAPS, 20% of the 6,608 members who have rated Amazon believe the stock will underperform the S&P 500 going forward.

Just yesterday, one of those Fools, Valueeqanalyst, touched on the stock's seemingly unsustainable valuation:

Amazon can either meet revenue growth expectations or margin growth expectations but probably not both. The stock trades at a very, very high multiple (even factoring in the growth) given that at the end of the day it's a retailer. Just for context, [Wal-Mart] has [net income] margins of about 3%, that's where [Amazon] can hope to get to. ... It'll take time, but a few misses can really punish the stock. Intrinsic value is probably about half of the [current price].

Of course, that short pitch doesn't even come close to telling the entire story for Amazon. You're in luck though. The Fool's brand new premium report on Amazon tells all sides of the story for one of the most compelling and powerful internet companies in the world. You can grab your copy, which comes with free updates for 12 months, by just clicking here.

Want to see how well (or not so well) the stocks in this series are performing? Follow the TrackPoisedTo CAPS account.

Fool contributor Brian Pacampara owns no position in any of the companies mentioned. The Motley Fool owns shares of Amazon and Apple. Motley Fool newsletter services have recommended buying shares of Amazon, Apple, and eBay, as well as creating a bull call spread position in Apple. Try any of our Foolish newsletter services free for 30 days.

We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy always gets a perfect score.


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  • Report this Comment On October 02, 2012, at 11:53 PM, kthor wrote:

    the Kindle Fire HD was a big dissapointment for me ..very sluggish and software looks like needing some work ...

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