The ultimate growth stock to buy now with $1,000

By | March 17, 2024

The Nasdaq Composite Table of contents is in record territory. While that is exciting news for some, it can be disheartening for those who have been on the sidelines.

But don’t let the rise of the market stop you from looking for attractive investment opportunities. There are still some quality companies selling at attractive valuations.

If you have $1,000 you are ready to invest, don’t look past it Amazon (NASDAQ: AMZN). This is why it is the ultimate growth stock to buy now.

Significant growth potential

Amazon generated $575 billion in net sales by 2023. That is more than the GDP of some countries, such as Ireland and Thailand. And it only puts Amazon behind it Walmart on the Fortune 500 list.

To be clear: this turnover figure makes Amazon a colossal organization. But investors would be happy to know that the company still has meaningful opportunities to expand, thanks to multiple growth tailwinds.

Amazon’s business is built on the expectation of the expansion of online shopping. Today, nearly 40% of all e-commerce spending in the US happens on the website. There is still a huge runway for online activity that will take market share from brick-and-mortar stores, which should boost sales in the coming years.

The popularity of Amazon Prime membership not only increases e-commerce sales, but could also lead to Prime Video attracting more TV viewing time. Amazon therefore also benefits from the streaming trend.

Then there’s digital advertising, a segment that has raked in $14.7 billion in revenue over the past three months. That total rose 26% year over year. In the US, only Amazon is behind Alphabet And Metaplatforms in the sector, something most investors may not realize.

Perhaps the most exciting part of the equation is the cloud distribution, Amazon Web Services (AWS). Although growth here has slowed due to macroeconomic headwinds, the industry-leading segment boasts a fourth-quarter operating margin of 30%. And AWS offers Amazon an important entry opportunity artificial intelligence innovations for its customer base.

Pay the price

It’s not hard to convince someone that Amazon is a great company. The facts speak for themselves. It’s no wonder the shares are up 8,300% over the past two decades.

But even at a Market capitalization at nearly $1.9 trillion today, it is still a worthy investment candidate. That’s because Amazon stock is currently trading at a price-to-sales ratio of just under 3.3. Even after the stock is up 113% since the start of 2023, its valuation is roughly in line with its 10-year average.

Paying that price for Amazon seems like the right move. This company has many competitive advantages that give me confidence in its ability to thrive well into the future. It has a size and logistics footprint that its competitors cannot match, especially when it comes to better serving its customer base.

And most importantly, Amazon continues to develop its data advantage. Few companies can collect the vast amounts of data from their customers that Amazon can. And management can continually find ways to gather insights that can better drive marketing and product development efforts.

However, investors have reason to be even more optimistic. After years of aggressive capital spending, executives are now focused on creating a more efficient organization, reducing costs across the board.

This means that Amazon, which saw its operating revenues rise 202% in 2023, could see an acceleration in earnings. And this could push the shares even further.

Now seems like a good time for potential investors to add Amazon to their portfolios.

Should You Invest $1,000 in Amazon Now?

Before you buy stock in Amazon, consider this:

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Suzanne Frey, a director at Alphabet, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, former director of market development and spokeswoman for Facebook and sister of Mark Zuckerberg, CEO of Meta Platforms, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Neil Patel has no positions in any of the stocks mentioned. The Motley Fool holds positions in and recommends Alphabet, Amazon, Meta Platforms and Walmart. The Motley Fool has a disclosure policy.

The Ultimate Growth Stock You Can Buy Right Now with $1,000 was originally published by The Motley Fool

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