Why Consider Amazon at This Price?

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In this edition of The Motley Fool's "Ask a Fool" series, Motley Fool analysts Jason Moser and Brendan Mathews take a question from a reader who asks, "Given Amazon's huge P/E ratio, how could anyone possibly consider investing in that company?"

While Jason and Brendan both understand the concern over Amazon's P/E, they are both also shareholders of the business and see plenty of reasons for investors to be encouraged about its future. Not only is founder and CEO Jeff Bezos a driven leader who is married to the success of the business, but there are also some nuances to Amazon's business model that aren't fully reflected in the P/E ratio. Amazon's negative cash conversion cycle helps the company fund its own growth, which can be very powerful. And that, along with its loyal and growing customer base, continues to build a strong competitive advantage for Amazon that is going to be difficult for competitors to overcome.

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The article Why Consider Amazon at This Price? originally appeared on Fool.com.

Brendan Mathews and Jason Moser own shares of Amazon.com. The Motley Fool recommends and owns shares of Amazon.com. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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