While I respect Chuck's opinion, Amazon.com (NASDAQ:AMZN) appears more richly valued than Wal-Mart (NYSE:WMT) and Target (NYSE:TGT) for a good reason. It's got a lot more potential for future growth, for the reasons I outlined in my opening argument.
I've definitely heard the theory that Amazon should be valued more like a traditional retailer than an Internet company -- but I think that's a mistake. Amazon brings multitudes of possibilities to the table for its customers -- and for its future revenues and profits.
Consider your trips to Wal-Mart or Target. Have you ever asked your fellow shoppers to rate that new toaster you're looking at, or give you their review of a DVD? When you browsed the book section, did either of those retailers have any book you were looking for, as opposed to a smattering of bestsellers and random titles? Same goes with CDs, and if you shopped at Wal-Mart, you may have gotten your song lyrics sanitized, whether you liked it or not. And how many times has Target recommended that if you like the CD in your hand, you'll love a related one on the rack -- and offered you a special deal on them both?
Amazon brings these kinds of value-added benefits to the table, culling a massive selection of products -- and product intelligence -- in a store that's always open, always convenient, and never too crowded to find parking.
Despite its recent fall, the stock trades at a P/E of 38. That sounds understandably pricey to investors who are comparing it to slower-growth companies. But like I said, it might prove to be a small price to pay for an e-commerce giant constructing ample strategies for high, sustainable future growth.
Last but not least, consider Amazon's storied history. Think of how many people doubted its various successful initiatives, or wondered whether it would become a dot-com bust. I wouldn't bet against Bezos. Would you?
Amazon.com is a Motley Fool Stock Advisor selection. Wal-Mart is a Motley Fool Inside Value recommendation. Whatever your investing style, the Fool has a newsletter for you.
Think you're done with the Duel? You're not! Go back and read the other three arguments, and then vote for a winner.
Alyce Lomax does not own shares of any of the companies mentioned. The Fool has a disclosure policy.
