(NASDAQ:AMZN) is one of the most successful companies to have emerged from the dot-com bubble. The online retailer's reach has grown enormously over the years and already extends further than many people initially thought possible, far beyond the reach of traditional retailers like Wal-Mart Stores (NYSE:WMT) and Best Buy (NYSE:BBY)

When I think of all the things I have done through Amazon, it never ceases to amaze me. I've bought and sold hundreds of new and used items, I've traded in music, movies, and books for store credit, I've borrowed e-books for free through the Kindle app, I've streamed movies and television shows through the company's Prime service. I've even self-published a book through Amazon's Kindle Direct Program.

Incredibly, some people do even more through the company including grocery shopping, fashion hunting, and couponing through Amazon Local. We are almost at the point at which it becomes easier to ask, what doesn't Amazon do?

Where does it end?
Most crucially, just how much more growth is left for the retail juggernaut going forward? This is not an easy question to ask but there are still some major steps Amazon can take to propel its revenue growth even further.

One of the major growth opportunities for Amazon is in the global smartphone market, which is expected to reach over $150 billion in sales by next year . Recently, it was reported that HTC was being tapped to make the retailer's first smartphone, which is expected some time in 2014.

Amazon's intent with creating a smartphone is most likely similar to its reason for creating tablets, not necessarily making money on hardware but rather keeping consumers locked in to all things Amazon. The retailer wants consumers to buy smartphone apps on the Amazon Appstore instead of from competitors like Google and Apple's digital marketplaces. This move into the smartphone market seems increasingly likely since Amazon has shown in the past that it is committed to entering new markets for the sole purpose of driving more traffic to the company's core businesses.

Another potentially major area of growth for Amazon could be through the installation of brick-and-mortar stores. In regard to this idea, Amazon founder and CEO Jeff Bezos explained in an interview last year, "We would love to, but only if we can have a truly differentiated idea." 

What exactly could a differentiated idea be in the brick-and-mortar business? That is hard to say exactly but the one thing that can never be ruled out is a visionary like Jeff Bezos. Can the man who revolutionized e-commerce revolutionize an industry foundation like brick-and-mortar that he himself is currently helping to destroy? I'd bet yes but it's entirely speculative at this point.

Is it a suitable investment?
As wonderful as the growth story has been, the company is also notoriously tricky to figure out as an investment. While Amazon typically generates impressive revenue growth each year, the company often struggles to even turn a profit.




Best Buy


Revenue Growth 2014




EPS Growth 2014




The most important takeaway from the table above is the large difference in revenue growth. Amazon is still clearly in aggressive growth mode, while Best Buy and Wal-Mart are struggling to grow sales year over year. This indeed is the main benefit of the online retailer's approach, while Best Buy and Wal-Mart can only expand their geographic footprints, Amazon is busy expanding into entirely new product categories across the world.

With regard to EPS growth, Amazon is projected to lead both competitors as well but the results are very misleading. It is easy for Amazon to grow EPS 267% next year when the company is only expected to earn a paltry $0.73 per share profit in 2013. 

The volatility in the company's business was perfectly illustrated during Amazon's latest earnings call, where CFO Tom Szkutak presented a wide range of guidance for both revenue and earnings-per-share growth. Company management expects revenue in the fourth quarter to be in a range of $22.5 billion to $26.5 billion, which represents a 15% differential in the company's year-over-year growth rate. GAAP income in the fourth quarter is expected to range from a loss of $500 million to a gain of $500 million.

As an investor, it is difficult to draw conclusions from such broad estimates. Even analysts struggle to come up with solid growth estimates for the company. Currently, the lowest estimate for Amazon's EPS in 2014 is $0.46 while the highest estimate is $5.04. This differential obviously makes it hard to draw much from the company's P/E multiples as well.

When presented with such disparity, what's an investor to do?

Believe in Bezos
Amazon as an investment is very difficult to judge and that is a main reason why I don't currently own shares. With strong revenue growth but spotty earnings per share performance, there is a great deal of uncertainty surrounding shares of Amazon in the short-term.

However, the crazy P/E multiples that the company trades at can also be seen as a vote of confidence of sorts. Institutional investors have shown repeatedly that they are comfortable owning shares at elevated valuation multiples and this indicates that there is a universally strong belief in Amazon's future growth prospects.

The company represents one of the strongest growth stories of the last two decades and it may very well not be over anytime soon. However, it is clear to me that to own shares of Amazon, an investor has to have supreme confidence in Jeff Bezos and his revolutionary ideas.

Philip Saglimbeni has no position in any stocks mentioned. The Motley Fool recommends, Apple, and Google. The Motley Fool owns shares of, Apple, and Google. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.