Buy Amazon Before Other Investors Realize Their Mistake

I consider Amazon.com (NASDAQ: AMZN  ) one of the rare companies that an investor can buy and add to over a period of not just years, but potentially decades. It has one of the strongest competitive moats I've ever seen, and it's growing stronger by the day. Amazon's tremendous scale and reach allow it to offer a broader selection of products at cheaper prices, and via a more convenient shopping experience (order from your Kindle while lying on your couch and have it shipped to your doorstep) than anyone else of the planet. That's a powerful competitive advantage.

Beyond these more obvious benefits, Amazon is expanding its moat through its Amazon Prime program. With each new feature Amazon adds to Prime -- such as its ramped-up content library on Amazon Instant Video -- the service becomes more valuable to customers, making them more likely to renew. And the more "sticky" Prime becomes, the more purchases consumers are likely to make through Amazon.

Amazingly, in addition to its massive global opportunity in e-commerce, Amazon has another megagrowth business in Amazon Web Services. In fact, Andrew R. Jassy, the head of A.W.S, has stated that "we believe at the highest level that A.W.S. can be at least as big as our other businesses." That's incredible, especially when you consider that Amazon's "other businesses" include its core retail operations, which in time may grow to make the e-commerce titan the largest retailer on the planet. Wall Street is beginning to catch on; Morgan Stanley recently published a report that highlights just how disruptive AWS could be to a huge segment of the IT industry.

I think the time is right to increase Tier 1's position in Amazon -- before more investors begin to realize the immense potential of AWS. And so, at least 24 hours after this article is published -- standard operating procedure for The Motley Fool's Real-Money Stock Picks program that's designed to give Fools the opportunity to buy ahead of us should they so choose -- I will be buying more shares of Amazon in the Tier 1 Portfolio.


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  • Report this Comment On June 27, 2013, at 6:16 AM, MFMotleyStool wrote:

    Basically a pump article with few facts and no mention of AMZN's deteriorating and horrific metric's over the last 12 quarters or more. It's a matter of time before this Ponzi is exposed for being exactly that. Why are fulfillment/shipping costs amongst other costs buried and not counted in their gross margins? Perhaps because the truth is even in these last few up quarters in their version of the metric they actually got worse and not better.

  • Report this Comment On June 27, 2013, at 9:01 AM, SRNoyes wrote:

    So AMZN has some great razor thin margin businesses that, being so thin, has AMZN with an undefined PE ratio due to it not being a able to manage costs adequately. Yep. Sounds like a great company to invest in.

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