Investors have long marveled at its resilience Amazon. Despite its enormous size, it has continued to achieve high levels of growth amid its leadership in e-commerce, cloud computing, and, more recently, artificial intelligence (Amnesty International).
However, with A Market value Now that it is worth more than $2.3 trillion, it is likely approaching the point at which high growth becomes more difficult. Thus, investors may want to consider other consumer-oriented stocks that can easily turn the market’s potential into faster growth. The following two stocks have the potential to deliver higher returns than the e-commerce and cloud giant.
Admittedly, the third-ranked energy drink on the market isn’t an obvious place to look for an outperforming stock. However, investors need to take a closer look at this Celsius (NASDAQ: CELH). It stands out by marketing itself as using natural ingredients. This approach has helped gain a following among health enthusiasts.
Sales levels also became supercharged after I signed a distribution agreement with them PepsiCo. This increased their availability, allowing outlets such as Amazon and… Costco To sell energy drinks in large quantities.
Unfortunately, distribution issues have caused its inventory to fall more than 70% from its high last year, as the main distributor, likely PepsiCo, has dramatically reduced its orders.
However, the distributor will likely adjust its order volume in the future, making this issue less significant. Moreover, sales of $1 billion in the first three quarters of 2024 managed to grow by 5%. While this is significantly slower than the 104% annual growth in the first nine months of 2023, it still represents an increase.
In addition, international purchases accounted for only 5% of Celsius’ revenue in the first nine months of 2024. However, sales grew 38% annually in the Europe and Asia-Pacific regions in the first nine months of the year. Given the growth potential in these markets, overall sales growth should improve as the company’s markets outside of North America demand a higher percentage of sales.
Furthermore, the stock price decline brought its P/E ratio to 41, a level near multi-year lows. Assuming overall sales increases can at least match its international growth rate over time, Celsius stock will likely move on from its recent distribution turmoil and resume its march higher.
Alternatively, if investors prefer to outperform Amazon in its own industries, they may want to turn to the company that is widely viewed as the “Amazon of China.” Alibaba (NYSE: BABA).
Admittedly, fear of another trade war with the US has sent shares of companies based in China lower, despite Alibaba’s lack of exposure to the US. China’s slowing economy coupled with nearly $3.8 billion in fines between 2021 and 2023 due to regulatory violations weighed heavily on its stock.
However, given Alibaba’s performance, one has to wonder whether the sell-off is overdone. The stock is down nearly 75% from its all-time high in 2020, and is down 10% from its IPO in 2014!
That decline left it with a P/E ratio of just 17, well below Amazon, which trades at 48 times earnings amid significant multiple pressure. Also, with Alibaba’s forward P/E ratio of just 10, investors may not fully appreciate the growth it is likely to see.
In fact, one could argue that Alibaba became cheap for a reason. Its revenue in the first six months of fiscal 2024 was $68 billion, an increase of 5% from year-ago levels. This is a significant decline from the same period in 2021 when annual revenue growth was 31%.
However, net income of nearly $10 billion for the first six months of 2024 was up 13% from year-ago levels. Thus, even with more subdued levels of growth, Alibaba’s earnings appear to be rising too quickly to justify its rock-bottom P/E ratio. This factor alone could lead to rapid share price growth if the negative sentiment surrounding Alibaba fades over the course of the year.
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Will Healy He has positions in Celsius. The Motley Fool has positions in and recommends Amazon, Celsius, and Costco Wholesale. The Motley Fool recommends Alibaba Group. The Motley Fool has Disclosure policy.
Should you forget about Amazon stock? Why these unstoppable stocks are a better buy Originally published by The Motley Fool