At $727 and change, a share of (NASDAQ:AMZN) stock is one of the most expensive things you can buy on the stock market today. But according to one banker, Amazon stock could also be one of the best bargains on the market today.

Earlier this morning, analysts at Oppenheimer raised their price target on already-buy-rated Amazon stock to $930 per share. That in and of itself is not news. Analysts shift their target prices on dozens of stocks every working day -- and they're usually wrong.

What's more interesting are the reasons that Oppenheimer has given in justification for its new and improved enthusiasm over the stock. Here are three things you need to know.

Image source:

Thing No. 1: AWS is AWesome!

The thing Oppenheimer likes best about Amazon stock is the company's Amazon Web Services (AWS) business, which provides cloud-based computing, storage, and database services to companies, government, and academic institutions. Currently Amazon's smallest division at just $8.9 billion in annual revenue, AWS is far and away the company's fastest-growing business, having nearly tripled in size over just the past couple of years.

S&P Global Market Intelligence currently pegs AWS for a 25.6% operating profit margin, which is about 10 times more profitable than the rest of Amazon. In fact, according to data from S&P Global, tiny AWS accounted for nearly $0.75 out of every $1 in profit that Amazon earned over the past 12 months.

Oppenheimer looks at these numbers and declares that AWS is delivering "even higher profitability... than previously expected." And how.

Thing No. 2: The rest of Amazon isn't looking too shabby, either

"But wait!" you say, "Doesn't Amazon also sell books and stuff?" Indeed it does, and Oppenheimer doesn't ignore this biggest part of Amazon's business. In a write-up covered on this morning, Oppenheimer argues that the already enormous Amazon is still expanding its e-commerce business in areas it views as "fragmented."

We've already noted Amazon's expanded offerings of private-label clothing lines, for example, and Oppenheimer highlights clothing as one of several categories where Amazon thinks it can grab market share. Another is "consumer packaged goods," which includes such non-perishable items as soft drinks, processed foods, and over-the-counter drugs that are easily shipped and unlikely to spoil during transport.

You might not expect such incremental expansions to move the needle much on a business as big as Amazon, which sells more than $100 billion in goods and services annually. But in fact, last year, e-commerce revenue grew 17.5%.

Thing No. 3: Revenue -- and profits, too

Even if e-commerce isn't as fast-growing as AWS, 17.5% is a very respectable rate of revenue growth. And according to Oppenheimer, e-commerce is also "set to benefit from easier margin comparisons in 4Q, setting the stage for sustained momentum" in profits as well.

Operating profit margin in e-commerce averaged 3.2% last year, up from 1.4% in 2014. While these are still small numbers, when applied to the much bigger number that is Amazon's revenue stream from e-commerce sales, they tend to produce very large numbers on the bottom line.

Bonus thing: "And one more thing..."

Speaking of bottom lines, we haven't yet discussed the real bottom-line issue for investors considering buying shares of Sure, Oppenheimer might be right about the stock going to $930 at some point -- but is its present price too high to buy?

With stock currently selling for nearly 300 times trailing earnings, the price certainly seems high. But consider this: That price-to-earnings ratio is derived from the stock's "accounting profit," which under GAAP standards is currently calculated at less than $1.2 billion for the past 12 months. Amazon's actual free cash flow for the past year, however, was about 5 times that GAAP profit number -- $6.4 billion. That means that, when valued on its actual cash profits, Amazon stock costs "only" about 54 times free cash flow.

Now admittedly, 54 times FCF is itself a pretty big number. It's huge, in fact, except when viewed in the context of Amazon's projected profits growth rate. Combine the growth of Amazon's e-commerce profits with the supersized growth from AWS, and analysts who follow this company predict a 54% long-term earnings growth rate for Amazon over the next five years.

As scary as the numbers may seem, one could argue that paying 54 times FCF for a 54% growth rate makes stock a great stock selling for a fair price. Oppenheimer is right to recommend it.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.