Why Amazon's Rainforest Rocks

When we think of the word "Amazon," we can easily free-associate to "rainforest." Of course, there's another free association that's far closer to home: Amazon.com (NASDAQ: AMZN  ) . If Apple (NASDAQ: AAPL  ) as envisioned by the late Steve Jobs is a beautiful yet tightly controlled closed garden, Amazon.com as envisioned by Jeff Bezos is a lush, diverse, expansive corporate entity. Both virtual places shine with some fair share of beauty and brilliance.

At its core, the real-life rainforest is a bastion of biodiversity. More than half of the world's species reside in the rainforest (although irresponsible and unsustainable human harvesting has threatened this mind-blowing attribute). Fascinating attributes abound; for example, plants and animals provide examples of adaptation to survive and thrive in rainforest life. Natural ways to combat disease can be found in its lush density. That one place can support so many of the types of life on the planet speaks for itself.

Amazon's amazing ecosystem
It's pretty easy for us to grasp why Apple keeps its operating system and apps so tightly controlled. Its functions transfer seamlessly to all devices, making a real case for such controls. On the other hand, Amazon.com thrives on spreading its business far and wide. It has come far from the early dot-com days, when it was often dismissed as "just a retailer" peddling books and music.

There are plenty of overt ways we can call Amazon's business diverse. There's the sheer breadth of its merchandise. It's a rare good that one can't find on Amazon, from the commonplace to the obscure. Amazon Prime helps it retain customer loyalty, giving members everything from free and cut-rate shipping to simple and occasionally free movie streaming. The Kindle has been a victory for the e-reader and reading in general, giving consumers an easier, cheaper way to expand their horizons.

Much like the many species deep in the rainforest, some of Amazon's advantages are sheltered in the forest's depth. Its significant role in the cloud arena is one of those advantages. Furthermore, though, did you know that Amazon owns Zappos? What about IMDb.com? Audible belongs to Amazon too. How about CreateSpace, its on-demand publishing unit?

Of course, Amazon has a pretty bloodthirsty reputation. It's well known for threatening revenues for retailers including Barnes & Noble, Best Buy, and even Wal-Mart. Costco is increasingly mentioned as a real head-to-head matchup for Amazon, since both are such strong and highly respected companies.

However, Amazon's incredible power isn't necessarily a bad thing. Just take publishing. As much as Amazon may hurt some booksellers, it also can carry a heck of a lot of obscure material that brick-and-mortar retailers just won't -- and really, feasibly can't -- carry. And speaking of CreateSpace, Amazon has boosted some self-published artists' work, giving them a platform to market it. Some self-published authors have had blockbusters solely through Amazon. Amazon provides inexpensive Amazon Shorts, helping the short-story arena, which has often seemed almost dead.

Amazon probably won't kill reading, but it will hurt some of the middlemen, such as the big major publishers, who are often more interested in marketability rather than art or even competence.

Mass layoffs? No, mass hirings.
Meanwhile, in light of what many called weak results from Amazon, we can go back to another interesting thing about Bezos' company: the willingness to truly invest in the future. His style is certainly not for short-termers, but long-term investors can see why this company is positioning itself for the very long term, regardless of razor-thin margins.

Just yesterday, we learned that Amazon plans to hire thousands of Americans. The behemoth's plans are mind-blowing: 5,000 full-time positions and 2,000 customer service jobs that could also be part-time or seasonal.

This is incredibly significant. Companies making smart investments in people, as opposed to holding on to their cash or even wasting it on stock-boosting moves like acquisitions, many of which end up being big boondoggles over the long term, are exactly what our country needs right now.

Unemployment is still too high. Even more impressive, perhaps Amazon is taking a key lesson from Costco's business. According to the news today, the jobs in its fulfillment centers will pay 30% more than the run-of-the-mill retail job, and full-timers will be eligible for stock grant and education benefits.

The Federal Reserve's actions really haven't helped the economy that much. What will help is getting Americans back to work so that they can, hey, buy stuff.

Meanwhile, if you want to talk financial nuts and bolts, an Amazon spokeswoman told USA Today that this is in response to growing customer demand. It's not all hearts and flowers. It's a win-win for investors, and for many American workers searching for jobs.

Amazon: The picture of business adaptation
I have recently become bullish on Apple -- mostly because its shares got so beaten down -- despite worries about Steve Jobs' absence and the chance that innovation could seriously slow.

Right now, Amazon.com strikes me as stronger than Apple. Bezos is still at the helm, and he is a visionary. What many on Wall Street consistently misunderstand about many great companies is that investment in the future is more important than short-term profits. In addition, my Foolish colleague Jason Moser recently pointed to a financial metric that many analysts and investors tend to shrug off, despite its importance: free cash flow, and how Amazon has plenty of that.

I consider Amazon.com to be a great stock for investors. Should investors buy now? One thing that has happened repeatedly over the course of this company's history is cyclical negativity about the near-term margins, which occasionally does drag the stock down considerably.

If you look at Amazon.com's 10-year chart, there have been some buying opportunities, although overall it shows consistent upward momentum over the long term. Of course, the past is not prologue, and sometimes investors can and maybe even should take a deep breath and dive in -- and with a great company that keeps on performing and evolving, over the long haul they should be rewarded.

Apple is of course cheaper when you look at metrics like price-to-earnings ratio and PEG ratio. Apple's forward P/E is 11, and its PEG ratio is a dirt cheap 0.62. Costco has never been known as a cheap stock in the retail space, but compared with Amazon, its forward price-to-earnings ratio of 23 and its PEG ratio of 1.90 are big bargains.

I can appreciate the well-manicured walled garden, its lovely landscaping, and the constant fight to protect itself from the forces of nature to keep it beautiful and hospitable. However, the lush and maybe even chaotic world that Amazon has created means it has lived up to its name -- and is an important part of the economic ecosystem.

When you step back and look at the big picture, it's incredible to think just how much of our digital and technological lives are almost entirely shaped and molded by just a handful of companies. Find out "Who Will Win the War Between the 5 Biggest Tech Stocks" in The Motley Fool's latest free report, which details the knock-down, drag-out battle being waged among the five kings of tech. Click here to keep reading.


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