Prime time for Amazon

The world’s largest online retailer is in a prime position to continue growing at a high rate, as long as it spends less on infrastructure and focuses more on its core business.

Summary: The world’s largest online retailer, Amazon, has lost some of its appeal to the market of late as investors lose patience about profitability. But make no mistake, Amazon is a dominant and disruptive company, with 250 million active customers and huge top-line growth forecast. If it can temper its investment spend on devices like the Fire Phone and instead focus on increasing its scale in developing markets and squeezing profitability out of Amazon Web Services, its future will be bright.

Key take-out: The noise around profitability appears to have mispriced Amazon’s business. I would buy at current levels, as I expect the stock to play catch up in early 2015.

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