Cramer on $AMZN

Accelerated revenue growth is a beautiful thing, and Amazon ($AMZN) has it in spades. That's why this stock is exploding higher today even though I am sure the nitpickers will be looking at some cash flow number they don't like, or analyzing the tax rates or what they pay in sales tax, for that matter.

When I hear that this multi-billion-dollar company has the strongest growth in 10 years, and I recall where the company was 10 years ago, I am pretty much blown away at the return this company is getting on invested capital. It is as if all those investments in customer service and fulfillment paid off in one gigantic quarter, and now Amazon is a cash machine that's got acceleration in sales and re-acceleration in media sales, both remarkable things.
I remember when Amazon was viewed by people as something of a Ponzi scheme, a company that pretty much gave away any hope of profit to be the endless "first-mover" of retail over the Web. It was a scorned and heavily shorted stock because of that.
Turns out that the strategy was dead right and Jeff Bezos, the man who always laughed at the scoffers, has gotten the last laugh all the way to the bank.
Still, the doubters dominated on the call. They are worried about sales tax collection even as half of the revenues they get have sales tax on them and yet that didn't stop the numbers from being great. They are worried about shipping costs and oil, not realizing that perhaps the spike in gasoline led to more online shopping. They are worried about the expense of the "Fulfilled by Amazon" business, not realizing that whatever they fulfill for others is basically gravy.
This is one of the cleanest quarters I have come across, and it is a reminder of the strength of the cloud -- for Amazon is, basically, the best cloud story out there.
It is tough to figure out what to pay. This stock sells at more than 2x the growth rate we thought we had here. But with accelerated revenue growth you can stretch what you pay, hence the more than 60x earnings and 2.2 on the PEG ratio isn't too much. Who knows? Maybe you are paying 1.8x or lower based on the outyears.
Just one of the great stories out there. What a run.

Random musings: eBay ($EBAY) is a great play off of what Amazon is saying, because the "fulfilled by eBay" biz, courtesy of the GSI purchase, should be paying big dividends this quarter as the retailers who choose it or migrate from Amazon can use it as a virtual outlet store.