Google, eBay and Yahoo! are natural comparisons. I include Apple and Hansen because they have been on fire this year and clearly represent companies that understand consumers and provide worthy products; and Wal-Mart because it's actually in the same business as Amazon.

If you are a value investor (think, Buffett, Graham, Hebner, Icahn, Lambert, Miller) and look at a P/B (price to book) value for Amazon of 41.11 you probably close the book on this stock. Again an amazing figure when you learn that Google is at 11.85 and Wal-Mart is at 3.59!!!

While I recently ripped Jim Cramer for his television antics, he is right on the money when he cast similar doubts on Amazon's valuation. A good brief read on the subject is this post by Blogging Stocks' Jon Ogg, published after Amazon reported earnings.

The more I think about Amazon's recent quarterly reports the more I think about how WorldCom grew. It bought its own growth! Which is just how Amazon is doing it, Cramer reminded us. In its reports it sometimes states that profits are down because of shipping cost discounts they are testing, sometimes because of increased spending on Research and Development (although R&D results never do seem to make an appearance on the bottom line), expanding into new product lines and offering new features, but again, with no bottom line results; acquisitions but profit, hard to find. You always hear how the top line (sales) is growing but not when the bottom line (profit) will expand. Call it the Wimpy factor: "I'll gladly pay you Tuesday for a hamburger today."

I clipped the following from Wikipedia. For a time, WorldCom (WCOM) was the United States' second largest long distance phone company (AT&T was the largest). WorldCom grew largely by acquiring other telecommunications companies, most notably MCI Communications. It also owned the Tier 1 ISP UUNET, a major part of the Internet backbone.

WorldCom ended up in bankruptcy, changed its name back to MCI and sold itself to Verizon Communications, (NYSE: VZ) which has seen its value grow as it integrates a multitude of new services and expands its customer base. It is important to remember that even in bankruptcy, MCI was the second-largest long distance carrier and Internet backbone as stated above. I point this out because I do not want to undermine the fact that Amazon does provide valuable products and services to its customers. If (and note this is a BIG if), anything were to happen to Amazon of this nature, there would be numerous companies ready, willing and able to pick up the valuable pieces.

WorldCom collapsed in a fantastic fraud-filled scandal, sending its long celebrated ex-CEO Bernie Ebbers to prison. By constantly expanding, he kept the company's financial picture in a blurry state that made tracking down the inequities difficult, if not impossible, until the whole enterprise collapsed under its own weight, and brighter lights were found to make clear the years of subterfuge.

How transparent are Amazon's financial books? How complicated is its business structure? Where will profits come from and when? What is a reasonable amount of time to wait? Is this a Must Own company? The only thing that gives it any credibility as an investment in my mind is that Bill Miller of Legg Mason, the value investor supreme, has made a big bet on the company. Apart from that, I am filled with nothing but doubt. Now I wonder if Miller has been selling into recent strength.

To me Jeff Bezos seems opportunistic and seems to circumvent tough questions with great style, now dabbling in spaceship projects. Is he just the master of ceremonies in a great circus? Anybody interested in a magic elixer step right this way...

Disclosure: I hold no position in any of the stocks mentioned.

More to read:

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Energy: Going forward while looking back

Sheldon Liber is the CEO of a small private investment company and the vice president for Design and Research of an architecture & planning firm.