Trades and observations from a British contrarian stock investor

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Friday, December 4, 2009

AMAZON - back to tech boom madness!?

With Cramer hugely bullish on Amazon (AMZN) and forecasting a further upside of $74 dollars from its recent $146, 52 week high, this could a nice opportunity to take a contrarian view for those feeling a little brave.


With Amazon stock having increased nearly three times from the $50 it was at the start of 2009, the figures look eye watering! Analyst put the target price at $163, whilst Cramer has cited a figure of $216 based on EPS of $3.60, against consensus of $2.60-$3.00. $216 would mean a forward 2010 price/earnings of 60! Back to the 2000 tech madness again!

With Walmart and Best Buy looking like they’re serious about taking on Amazon on price plus expanding their presence online, achieving this sort of earnings growth looks a high risk proposition. Shorting Amazon seems to make a lot of sense despite the momentum in the other direction and if the company does trip up if any way at all, $146 is going to look expensive never mind $200! A cautious short against the crowd of sentiment.
Posted by Contrarian Investor UK at 12:57 PM

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