For all its top-line growth, Amazon.com, Inc. (NASDAQ:AMZN) just doesn't see much of its sales flow through to the bottom line, and investors shouldn't expect that to change. Companies either normally invest back into themselves or distribute their profits back out to shareholders.
What makes Amazon one of the top stocks on the NASDAQ is its constant need to innovate and stay ahead of its competitors. The company has come a long way from just being an online store. It has gotten into video streaming, grocery stores, and now is looking at offering customers bank accounts as well.
Not knowing what Amazon will do next or what idea it will have is a big reason why its stock trades at price-to-earnings ratio of over 250. Investors know that the company will continue to grow, and it's just a question of how it will do so that seems to leave consumers in awe.
Apple Inc. (NASDAQ:AAPL) used to be synonymous with cutting-edge technology and being a market leader. However, with the passing of Steve Jobs the company's vision isn't as adventurous as it once was. Instead, Apple has matured and has started paying investors a decent dividend as well, something that is rare for tech companies.
That's why it's not a surprise when you see that Apple is trading less than 20 times its earnings. The company has lost its hype factor and is attracting a different type of investor.
Amazon, however, still has a lot of excitement surrounding its stock, and as long as it focuses on innovation rather than profit margins, its share price will continue to soar.
