Experts shop for value at Amazon (AMZN)

Two of the newsletter industry's leading growth stock advisors remain bullish on the prospects of online retailer Amazon (NASDAQ: AMZN).

Mike Cintolo, editor of The Cabot Top Ten Report, explains, "Amazon.com recently blew away earnings expectations." Meanwhile, Alexander Green, investment director at The Oxford Club, says, "In our view, the best lies ahead for the company." Here are their reviews.

Mike Cintolo says, "Amazon announced that its Kindle e-book reader is now its most popular selling item, both in units and in dollars.

"That led to a big acceleration in revenue growth (28%, the fastest in fi ve quarters), while earnings leaped 67%.

"As for the company’s regular business, we believe the economic turnaround combined with Amazon’s traditionally loyal customers is going to lead to big growth, especially during the holiday season.

"Meanwhile, the Kindle reader, though it faces growing competition, is easily the best-recognized of all e-book readers. And we believe the potential remains enormous.

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"As the technology improves and prices come down, millions of people are likely to start reading their favorite blogs, newspapers, magazines and books on an electronic reader, saving money (e-books are far cheaper than hard copies) and effort. Amazon is a now a leader of this bull market. 

"AMZN isn’t coming off a traditional basing pattern, but the stock did rest for much of the past six months. The stock had a nice recovery in the spring, but peaked just above 86 in April and, struggled until Labor Day.

"Following its latest earnings announcement, the stock rose 27% on volume that was eight times average. Our experience with earnings gaps this big, in this liquid a stock, is that they’re buyable right away. So pick up some shares around here."

Alex Green explains, "Amazon is no longer content to be the world's biggest e-tailer. Its new goal is to become the world's leading retailer. Period. It still has a long way to go, but the company is doing an excellent job of defending and expanding its turf.

"Amazon now sells just about everything under the sun. Its highly automated and centralized operations run at a much lower cost than traditional retailers.

"Not having stores means the company doesn't have the usual expenses of buying real estate, or building new retail centers, or hiring huge staffs, or paying all those utilities.

"Meanwhile customers have learned that shopping with Amazon is reliable, cheap and easy. The company is not just a big hit with consumers, incidentally. Tech Crunch, an online-technology publication, estimates that more than 60,000 corporate customers now use Amazon.

"The online leader is also expanding rapidly overseas. It now ships in six foreign countries, including Germany, Japan and China. International sales make up almost half of total revenue.

"Yet most investors still don't understand one of the most attractive parts of Amazon's business prospects. It's called cloud computing.

"Cloud computing is what happens when businesses outsource information-technology and data-center operations to third parties. It allows them to tap into Amazon's raw computing power, storage, software applications and data.

"Small businessmen increasingly ask themselves why they should hire a team to build and run their own retailing website when they can piggyback on the phenomenal success of Amazon.

"And just pay the company a small percentage of sales to handle their business.  This way they avoid spending time, money and resources on servers and data centers.

"Cloud computing will soon create hundreds of millions of dollars in annual revenue for Amazon. 

"Over the last year, Amazon has also unveiled mobile-shopping apps that allow customers to use their cell phones to compare its prices while shopping in traditional stores. (And place their Amazon orders on the spot.)

"Looking forward, Amazon predicts fourth-quarter revenue could top $9 billion and profits may hit $425 million. These numbers look conservative. And despite the recent move in the stock, in our view, the best still lies ahead."