Amazon.com Inc.AMZN

By offering low prices, generous shipping terms, great customer service, recommendations, wish lists, friends' lists, and so on, Amazon has garnered customer loyalty. Combined with Amazon's distribution capabilities, this loyalty allows the company to expand into new product lines with very little cost.

Although the sale of media products has slowed, Amazon still has plenty of room to expand in new product categories and international markets.

Amazon has leveraged its existing assets in creative ways, such as allowing third-party sellers to sell on Amazon.com and use its fulfillment services, licensing its retail platform to large merchants, and licensing its payment services.

Although operating margins are low, the company's asset-light business model has led to high returns on capital.

Although we're not convinced Amazon can compete in the long run, the company offers a suite of services in the nascent cloud computing market. Read more 

Amazon is heavily exposed to consumer spending, and though its position as a low-price provider of many goods could be an advantage during a consumer spending downturn, it could still suffer during a long, deep consumer spending downturn.

As more media products are sold in digital formats, Amazon's traditional advantages of selection and distribution could become less important. Although the company is off to a good start with the Kindle, digital initiatives for music and movies have fared poorly.

Beyond core retailing, many of Amazon's other ventures have bombed, including the A9 search engine, Amazon auctions, and Unbox--Amazon's original video-on-demand service.

If Amazon is forced to begin collecting sales taxes, we think that the firm's value would fall, as it would likely have to either accept some of the tax hit on the behalf of consumers, or lose sales. Read more