Amazon.com, Inc. (AMZN)’s Fresh-Squeezed Plan to Crush Grocers

In this case, differentiation and customer experience is key, and anyone who doesn’t have it is a weak contender against Amazon.

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Grocers (and investors who own shares in them) have some time to prepare, since Amazon’s bigger push into urban markets isn’t expected until next year. And if its moves into other markets fail, the whole idea could be scrapped like the rotten produce hidden at the back of the fridge. Still, the possibilities are fascinating — and possibly very material for the future of weaker brick-and-mortar companies.

Amazon shares have always looked “expensive” over much of the course of its history. However, its business channels are so mind-bogglingly large and diverse, and represent so many possible growth drivers, we may one day look back and realize that Amazon shares were pretty cheap in 2013. Granted, it’s a great white shark, out for blood, but it’s good at what it does, and its customers love it.

Stocks like Safeway, Kroger, Best Buy, and Barnes & Noble all trade at far lower multiples than Amazon. On the other hand, Amazon’s forward price-to-earnings ratio of 84 can make even the coolest investor choke. However, going for those “cheaper” stocks is paying for mediocrity and in some cases, possibly even failure in the long term.

If you’re looking for a truly long-term company to invest in, Amazon’s supposed rich valuation may be just an obstacle in your way. If you’re a little more risk-averse and aren’t willing to pull the trigger now, wait for a temporary moment of weakness (every once in a while, investors balk at its price and send it sailing lower) — but regardless, Amazon looks like a solid stock for long-term portfolios.

The article Amazon’s Fresh-Squeezed Plan to Crush Grocers originally appeared on Fool.com and is written by Alyce Lomax.

Alyce Lomax owns shares of Whole Foods Market. The Motley Fool recommends Amazon.com and Whole Foods Market. The Motley Fool owns shares of Amazon.com, Microsoft, and Whole Foods Market.

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