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Robert Freedland looks for companies with strong balance sheets, consistent growth and hidden values in his Covestor Buy and Hold Value model. This week, he bought shares of Amazon.com (NASDAQ: AMZN) for the model. AMZN has a PE ratio  of 70.9 (on February 5th according to CNN Money), so expectations for future growth are very high. On his blog, Stock Picks Bob's Advice, Freedland recently had this to say about AMZN:

So what is an investor to do about Amazon (AMZN), a stock that sells at a p/e north of 70 and a PEG over 2.5?  It is easy to say it is just too expensive and maybe it is wiser to buy a value retail stock like Wal-Mart (WMT) that sells with a p/e of 13.88 and a PEG of 1.29.  But there is more to value in making a decision about an investment like this.  If we believe that there are few companies that can now compete with Amazon in the same wide and extensive fashion, then we can believe that this company has a 'moat' that may actually justify this premium valuation. ("Amazon (AMZN)," January 24, 2011, Bobsadviceforstocks.tripod.com.)

AMZN's value does not lie in a lack of competitors, because the company faces competition for each segment of its business, for instance--Sears (NASDAQ: SHLD) and Netflix (NASDAQ: NFLX) both offer some alternative options for streaming video, Apple (NASDAQ: AAPL) also offers an alternative for streaming videos as well as MP3 downloads and may eventually cut out some of AMZN's ebook business  (if their recent rejection of the Sony e-reader app is any indication of future plans). Speaking of ebooks, AMZN also competes with ailing bookseller Barnes & Noble (NYSE: BKS) and Borders Group (NYSE: BGP) which just received a delisting notice from the NYSE. But as Freedland mentions in his post, there are no other retailers serving all of these segments at once, as well as fulfilling other retail needs.

*Prices courtesy of Yahoo Finance.