Amazon.com, Inc. (AMZN)

Difficult company to understand, because they tend not to be traditional. They don’t try to satisfy the street by returning capital to shareholders through dividends or buybacks. They don’t try to satisfy the street by having a progression of earnings over time.

Amazon (AMZN-Q) or Google (GOOGL-Q)? A tough one. It is the battle of the Titans. He would own both. He likes to buy companies that are disruptors and that change industries, and both of these have clearly done that. This company is crushing a whole bunch of retailers. You could also buy the ETF (PNQI-Q) which is an Internet-based ETF giving you a basket, or FDN-N, the retail ETF.

The company is phenomenal. With drones, etc., they are on the leading edge of distribution. From a logistical distribution standpoint you won’t find anything better. Part of the problem is that it is run like a private company. The most recent quarter was a big earnings miss, hence the pullback. It has been subject to moderate negative earnings revisions, which is never a good thing. On a long-term basis, it is still a very attractive place to be, but you can’t count on it on a quarter to quarter basis. Doesn’t make the cut for him because it is too volatile.

You have to believe in the greater concept that Amazon is trying to achieve. They can make money if they want to, but is probably positioned not to give you a lot of earnings or dividends for a long time. A lot of the money goes back into developing and growing the business. The Cloud business is doing incredibly well and the retail business continues to grow taking market share away from the big box players. The company has changed the way people think about retail and will continue to do so. Expects they will continue to grab market share away from a lot of stores. When you see big Down moves in the stock, that is the time to try and buy it.

This continues to be a category killer. They account for 20% of all US online sales. Reporting on Thursday, so it is going to be interesting to see what happens. We are currently in the middle of an 18% drop. Had a strong year last year being up 140%. They are doing everything right.

It does not fit into any box. It is tough to analyze. 50% of online shipments over Christmas came from this company. It is a really good model. If they cut back on reinvesting cash flow into the business it would create earnings.

A great company, but you have to be able to stomach some volatility. They are really taking over the retail space. When looking at some of the retail stores, you can see this company is having a major impact on them. As the consumer matures online, they are more likely to go and buy other things then what they would have before. This has a high valuation and is incredibly expensive, and he would probably buy it on a pullback.

Trading well over 150X forward earnings. Has a great long-term growth rate, but his concern is that if they run into a hiccup, the stock is going to come off pretty quickly. Trading at 2X PEG ratio. This makes a lot of sense, but he can’t get past the valuation.

This doesn’t fall into a traditional valuation metric. They have shown incredible independence in reinvesting in their business, to the point where basically they have very little free cash flow at the end of the investment cycle. Earnings are very muted. This is not struggling for cash flow. They have lots, but they just spend it. Their CapX budget is huge. They have become a major force and are now expanding into content and doing some great things. Just isn’t enough visibility and transparency for him to make a commitment.

Chart shows the company has had a very, very strong upward move this year. It is currently in the period of seasonal strength, which normally lasts until about the beginning of January. This is a key stock in the retail merchandising side. Because it is e-commerce, he is looking for strong growth over the Christmas season.

One of those amazing names where value managers would never buy it. It has strong revenue growth. His attitude is that when you have strong revenue growth, it can solve a lot of problems. If he owned, he would probably be shaving it down. Eventually the advances will be over, but it is not over yet.

What’s not to like about the chart. It broke out this fall after summer consolidation. It might be a little overbought and might come back for a re-test of the break out, but don’t wait too long.

Anything really good is really expensive in this market. It is at EBV +9, which is insane. We have not seen these valuations since the 2000s. The market is getting very narrow. Only a few companies are leading the market. He cannot tell you to buy it, but it is working now and could go higher.

The best place to be in retail is the online retail space. They have 11% of all online retail sales. They should continue to accelerate. Their cloud based services business had a 60% growth rate in the last quarter. It is not an inexpensive stock. It checks all of his boxes.

You don’t want his opinion. They take in $100 Million and make no money. Their margin is 0.1%. He does not understand the company or the value. It would be a huge risk if there was a correction at some point.