Amazing Amazon

What can I say about Amazon?

It is expensive and it is lovely, just like a pair of Armani jeans or a Lamborghini.

All CEO Jeff Bezos talks about the is Kindle - Amazon's eBook reader. And you can see why. The statistic that 6 eBooks are sold for every 10 physical books where both are available is astounding. Only a couple of million Kindles have been sold so far so Kindle owners really do read!

There is no doubt that in the long run books are going digital. Amazon want to do to eBook readers what Apple did to MP3 players - bring them to the mass market and own the space. If they achieve that goal there is no doubt that the current market price will appear cheap.

However I don't think everyone will be willing to fork out $250 for a black and white book reader when you can get an iPod touch for $200. But if everyone starts using the iPhone Kindle app. then that would be something.

That brings me to the fundamentals:

Market Cap: $60 Billion

Dividend Yield: 0%

Cash: $6 Billion

2010 PE: 45

Predicted Growth Rate: 30% annual

Amazon is not cheap. It hasn't been cheap for a long time and I don't think that is about to change. But it is growing at a rate of over 30% and seems able to sustain that over the medium term.

Some might call it speculative but I want some!

Here is the scorecard:

Growth Potential: 9

Risk: 8

Valuation: 4

That give Amazon a score of 21 out of 30.

Next up is Valeant Pharmaceuticals.