Understanding stock valuations can be difficult. What's more, the seemingly countless varieties of ratios don't make it any easier: price-to-earnings (P/E), price-to-sales (P/S), etc.

However, grasping these ratios is critical to understanding how expensive a stock truly is. Similarly, simply checking the share price doesn't reveal that information -- a stock trading at $2,000 could be far "cheaper" than a stock that trades at $20, depending on the underlying financial condition of the two stocks.

Accordingly, let's delve into why I think investors should consider Amazon (NASDAQ: AMZN) based on its valuation.

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Source Fool.com