dumb money 76

Market Break Out: Intel, Amazon Lead the Way

This is a joke. I can't tell if the author seriously believes that the kindle note that came out the other day is really a justification for the price of AMZN or if he is just pumping it for some other reason.

If you did the research you would see:

1) The analyst that increased his projections on the kindle did not have any access to real numbers. Instead, he based it on a leak to a tech blog. However, what he didn't realize is that the number leaked was the number of kindles shipped to AMZN.

2) Even if his very aggressive projections do hold, he is forcasting another $200 million in REVENUE, not profit, for AMZN over the next 3 years. That news translated into a runup of AMZN on monday that equaled $3 billion in market cap. I think that info is already more than priced in to the price.

3) AMZN has one of the most ridiculous priced stocks aroud:

GOOG
Trailing P/E (ttm, intraday): 33.27
Forward P/E (fye 31-Dec-09) 1: 20.96
PEG Ratio (5 yr expected): 0.85

AAPL
Trailing P/E (ttm, intraday): 35.03
Forward P/E (fye 29-Sep-09) 1: 29.62
PEG Ratio (5 yr expected): 1.39

WMT
Trailing P/E (ttm, intraday): 18.32
Forward P/E (fye 31-Jan-10) 1: 15.22
PEG Ratio (5 yr expected): 1.41

AMZN
Trailing P/E (ttm, intraday): 64.23
Forward P/E (fye 31-Dec-09) 1: 41.46
PEG Ratio (5 yr expected): 2.17

Tell me how AMZN can justify that premium. In reality AMZN's number should be more like
Wall Mart's because it is still a retailer, but even if you give it a tech companies multiples, its still about twice as expensive as it should be.

If you follow this advice and dump all the money you have into AMZN stock, you will be buying into an unsustainable bubble.