Should You Forget Amazon Stock? Why these unstoppable stocks are better buys

Investors have long marveled at the resilience of Amazon. Despite its massive size, it has continued to return with high levels of growth amid its leadership in e-commerce, cloud computing and, more recently, artificial intelligence (AI).

However, with a market capitalization now at more than $2.3 trillion, it is likely approaching a point where high-percentage growth will become more difficult. Therefore, investors may want to consider other consumer-oriented stocks that can more easily convert the market’s potential into faster growth. The following two stocks have the potential to generate higher returns than the e-commerce and cloud giant.

Admittedly, an energy drink that’s #3 on the market isn’t an obvious place to look for superior value. However, investors should take a closer look Celsius (NASDAQ: CELH). It stands out for its marketing that uses natural ingredients. This approach helped him gain a following among health enthusiasts.

Sales levels were also supercharged after signing a distribution deal with PepsiCo. This increased its availability, allowing outlets such as Amazon and costco to sell their energy drinks in bulk.

Unfortunately, distribution woes sent its stock down more than 70% from last year’s peak as a major distributor, likely PepsiCo, dramatically cut its orders.

However, the dealer will probably adjust their orders in the future, which will probably make this problem less of a problem. In addition, sales of billion dollars in the first three quarters of 2024 managed to grow by 5%. While that’s dramatically slower than the 104% annual growth in the first nine months of 2023, it’s still an increase.

Additionally, international purchases accounted for just 5% of Celsius’ revenue in the first nine months of 2024. Still, sales grew a combined 38% year-over-year in the Europe and Asia-Pacific regions over the nine first months of the year. Given the growth potential in these markets, overall sales growth should improve as the company’s non-US markets claim a higher percentage of sales.

Also, the falling stock price has pushed its P/E ratio to 41, a level right next to multi-year lows. Assuming overall sales increases can at least match its international growth rate over time, Celsius stock will likely move past recent distribution disruptions and resume its upward march.

Alternatively, if investors prefer to outperform Amazon within their own industries, they may want to turn to the company widely perceived as the “Amazon of China.” Alibaba (NYSE: BABA).

It is true that fear of another trade war with the United States has depressed shares of China-based companies, despite Alibaba’s lack of exposure to the US. It also weighed in on a slowing economy in China along with nearly $3.8 billion in fines between 2021 and 2023 for regulatory violations. significantly in their actions.

However, given Alibaba’s performance, one has to wonder if the sale is overblown. The stock is down nearly 75% from its all-time high in 2020 and is even down 10% since its IPO in 2014!

That drop has left it with a P/E ratio of just 17, far less than Amazon, which trades at 48 times earnings amid significant multiple compression. Also, with Alibaba’s forward P/E ratio of just 10, investors may not fully appreciate the growth it’s likely to experience.

Indeed, one could argue that Alibaba has become cheap for a reason. Its revenue for the first six months of fiscal 2024 was $68 billion, a 5% gain from year-ago levels. This is a dramatic setback compared to the same period in 2021, when annual revenue growth was 31%.

Still, the nearly $10 billion in net income for the first six months of 2024 was up 13% from year-ago levels. So even with more muted levels of growth, Alibaba’s profits appear to be rising too quickly to justify its forward P/E ratio. This factor alone could lead to rapid share price growth if negative sentiment around Alibaba fades over the course of the year.

Ever feel like you’ve missed the boat on buying the hottest stocks? Then you’ll want to hear this.

On rare occasions, our expert team of analysts issues a “Double Down” stock. recommendation for companies that believe they are about to exit. If you’re worried you’ve already missed your investment opportunity, now is the best time to buy before it’s too late. And the numbers speak for themselves:

Nvidia: if you invested $1,000 when we doubled in 2009, you would have $352,417!*
Apple: if you invested $1,000 when we doubled in 2008, you would have $44,855!*
Netflix: if you invested $1,000 when we doubled in 2004, you would have $451,759!*

Right now, we’re issuing “Double Down” alerts for three incredible companies, and there may not be another opportunity like this anytime soon.

See 3 “Double Down” actions »

* Stock Advisor returns from January 6, 2025

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Will Healy has positions in degrees Celsius. The Motley Fool has positions in and recommends Amazon, Celsius, and Costco Wholesale. The Motley Fool recommends Alibaba Group. The Motley Fool has one disclosure policy.

Should You Forget Amazon Stock? Why these unstoppable stocks are better buys was originally published by The Motley Fool

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