During the 1970s and 1980s, there was much skepticism about Wal-Mart (NYSE: WMT). Could the company keep up its growth? What about the huge amounts spent on technology, distribution, and logistics? And, could the company compete in urban locations?
Interestingly, another game-changing retailer -- Amazon.com (NASDAQ: AMZN) -- has been facing the same kinds of criticism. Yet, the company keeps proving its detractors wrong. After all, during one of the worst Christmas seasons last year, Amazon.com posted a strong performance.
Well, according to a piece in Barron's (a paid publication), it looks like some savvy investors are quite bullish on the stock.
Let's face it, Amazon.com has a powerful brand, an easy-to-use website, great customer service, broad selection, and competitive prices (hey, I've used the site for over ten years and never had any issues).
In fact, by not having retail outlets, Amazon.com can realize considerable cost savings (which are passed along to customers).
Moreover, the company is finding innovative ways to leverage its infrastructure. For example, Amazon.com provides its data, e-commerce, logistics, and storage services to third-parties.
There is also the growing popularity of the Kindle (even Oprah likes it). If it can get critical mass, there should be a bump-up in margins.
But isn't the stock price of Amazon.com too high? Perhaps. But, wasn't this the charge against Wal-Mart? So long as Amazon.com can keep up its growth -- and innovation -- the stock should follow nicely.
Tom Taulli is the author of various books, including The Complete M&A Handbook
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