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Amazon's Tipping Point

The vast majority of Wall Street analysts, including us, have dismissed Amazon's business model as unsustainable because the company isn't profitable. That could change in 2014. If it does, Amazon is poised to go on a fast and furious rise from $400 to $1,000, as the bears throw in the towel and respect Amazon's disruptive dominance.

It's important to note that everything we've said about Amazon is also true about Alibaba in China. If Amazon can go to $1,000, it means Yahoo! (YHOO) can go to $100.

Our epiphany on Amazon is coming late. Nevertheless, it could be argued that the stock run over the past five years has been "tough money" in the absence of profitability. The massive investment Amazon has made in infrastructure could be on the verge of wiping out traditional retail. We'll get more clarity on Jan. 30.

In terms of stock action, Amazon hasn't gotten a pre-earnings run. It closed at $395 on Dec. 18 and has hovered near that level over the past month of trading. This earnings report is worthy of a "flyer" position, similar to how we'll handle Apple. If Amazon delivers, the portfolio will have AAA status. 

Apple is the innovator. Amazon is the disruptor. And Alibaba will be the IPO of 2014.

Here is a roundup of articles on Amazon's disruptive power.

At the time of publication, the author was long on AAPL but held no positions in any of the other stocks mentioned.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

Jason Schwarz is an option strategist for Lone Peak Asset Management in Westlake Village, Calif. He is also the founder of the popular investment newsletter available at Over the past few years, Schwarz has gained acclaim for his market calls on the price of oil, Bank of America, Apple, E*Trade, and his precision investing in S&P 500 option LEAPS. His book, The Alpha Hunter, is available from McGraw Hill.
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