Amazon.com is “the most misunderstood, most underestimated” household name in US, Cramer said during Monday’s Mad Money.

• Cramer's Top 5 Dividend Plays

Wall Street just doesn’t get the business model, and that’s led to a rash of negative analyst reports and short positions. What these so-called professionals fail to realize, Cramer said, is that Amazon’s

AMZN loading...

Quote  |  Chart  |  News  |  Profile

[AMZN  Loading...      ()   ] not the online Borders

BGP loading...

Quote  |  Chart  |  News  |  Profile

[BGP  Loading...      ()   ], it’s the online Walmart

WMT loading...

Quote  |  Chart  |  News  |  Profile

[WMT  Loading...      ()   ]. In fact, the Seattle-based dot-bust survivor may in fact outperform Walmart and offer investors a cheaper stock.

Books, music and other media products still account for a majority of Amazon’s sales, but the company has expanded into dozens of new product categories, which Wall Street has seemed to miss. Acquisitions, such as online apparel and footwear retailer Zappos.com, boost exposure to consumer spending and decrease the chance that one category alone could sink a quarter’s earnings.

The shorts also overstate the importance of Amazon’s products, like the Kindle e-reader. Competitor devices may hit revenues in this one niche space, Cramer said, but they won’t derail Amazon’s larger secular growth story.

Amazon.com succeeds because it operates outside of retail’s normal constraints, and that provides tremendous growth potential. As an Internet business, the strategy is to buy many product categories in smaller quantities, thereby giving customers maximum selection and eliminating the inventory risk suffered by brick-and-mortar retailers. Amazon has become so good at filling and delivering orders that it can do so at a lower cost than Walmart, allowing the former to undercut the latter’s prices, which was unheard of until now.

Amazon’s biggest potential comes from e-commerce’s virtually unlimited growth. Internet sales registered a 21% five-year compound annual growth rate versus just 5% for total retail sales. And Amazon has been outperforming those e-commerce numbers. Plus, while Walmart and Target

TGT loading...

Quote  |  Chart  |  News  |  Profile

[TGT  Loading...      ()   ] can open only so many stores, there’s almost no cap to how far Amazon and its online operations can expand. This also means, Cramer said, that there’s no ceiling for the stock’s price-to-earnings multiple.

Amazon’s P/E right now is 38 based on 2011 earnings. At first glance, that looks expensive compared with Target and Walmart, which trade at 12 and 13, respectively. But not when you factor in Amazon’s earnings growth: The company’s profits are expected to climb at a rate of 34% in 2011, a huge number that Wall Street’s money managers will happily pay up for, Cramer said. Not to mention, that growth is accelerating, with Amazon’s earnings up sequentially last quarter, while Target and Walmart reported sequential declines.

The shorts have been wrong about Amazon time and time again, but they keep returning to the stock. Their “panicked buys,” as Cramer described their position covering, were the driving force behind the higher prices we’ve recently seen. And they’ll produce the still higher prices to come, he said.

Call Cramer: 1-800-743-CNBC

Questions for Cramer?

Questions, comments, suggestions for the Mad Money website?