Barron's Says Buy E-commerce King, Amazon.com (AMZN)

March 30, 2009 11:26 AM EDT

Barron's historically bearish on Amazon (Nasdaq: AMZN), ostensibly has changed its way, and thinks Amazon.com is now a great company. Barron's said Amazon is winning customers with competitive prices, wide selection, reliability and its electronic reader, Kindle.

Barron's bullish on Amazon.com for the following reasons:

• No expensive retail real estate.
  
• Consumers don't have spend money on gas driving to stores and fighting the mall parking lot.
  
• Amazon.com is able to run at a significantly lower cost than that of a traditional retailer (employees, inventory, utilities).
  
• While many retailers suffered in '08, Amazon.com's free cash flow rose 16% in '08.
  
• Amazon web services, including: databases, computing capacity and data storage.
  
• Amazon has already 350,000 Kindle devices.
  
• Shares sell at roughly 20 times FCF, which is less than Wal-Mart's (NYSE: WMT) FCF multiple of 22.6 and Costco's (Nasdaq: COST) 25.4.
  
• Huge upside with Amazon.com with less than 10% of retail sales done over the Internet.
  
• Amazon is also growing overseas. It now ships in six foreign countries, including Germany, Japan and China.
  
• Gene Munster says Amazon's high satisfaction ratings is reminiscent of Apple (Nasdaq: AAPL) before the iPod and Netflix (Nasdaq: NFLX) prior to big runs in their stocks.
  
• Amazon's Kindle could help increase Amazon's profit margins.
  
• Amazon's wide selection and competitive pricing make Amazon "the world's best retailer" says Barron's.

Amazon.com, Inc. (Amazon.com) offers services to consumer customers, seller customers and developer customers.

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