Amazon’s on ‘Fire’ Now, But Can it Stay This Hot for Much Longer?

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tdp2664 InvestorPlace While Amazon.com Inc. ( NASDAQ : AMZN ) is a great company, this a U.S.-based multinational online retailer has a not-so-great stock price. Sure, the stock is up 15.35% since the beginning of this year, easily outpacing the overall stock market . But even with the fervor surrounding the new Amazon Fire tablet, its market cap of $97.58 billion and a price-to-earnings (P/E) ratio of 94.83 give me great reason to pause, especially given the 63 multiple on 2012 earnings. In other words, companies this big simply can’t grow at the same rate; it’s simply the law of large numbers. The news that AMZN will start collecting sales tax in the upcoming years in California and Tennessee looks like a precursor to charging sales tax across the United States, lessening a competitive advantage. Target (NYSE: TGT ) and Wal-Mart (NYSE: WMT ), the two biggest competitors on the retail side, have made strides recently in their online sites, another potential headwind. With only 3% margins, the company has to generate enormous revenue growth to justify its lofty multiple. So while revenues and earnings will grow, the torrid rate is sure to slow — leading to a multiple contraction. I’m looking for AMZN to drop back to the $180 level by March 2012. Based on AMZN’s current market price of $230 and using a target price of $180, a target date of March 1, 2012, and $10,000 of investment capital, we've identified several options strategies and a comparative stock trade to consider, should the price target be achieved at the target date. To play this with options, visit TradingBlock.com , create a free Instant Login and try the TradeBuilder feature. Input the ticker, target price and date, and investment amount, and you'll see several ways to trade that include buying an April put or a put spread, selling an April call spread, or using some more-advanced strategies. Best of all, you can see a potential profit-and-loss outline for each strategy. If you set up an account, you can hit the "Trade" button on your preferred strategy and be on your way! Create your free login, and get access to these AMZN option trading strategies by visiting the TradeBuilder here .