Investors have long been surprised at the resilience of Amazon. Despite its massive size, it has continued to return high levels of growth in e-commerce, cloud computing, and, more recently, its leadership. artificial intelligence (AI).
However, with A Market Cap Now at more than $2.3 trillion, it is likely approaching the point at which high-percentage growth will become more difficult. As such, investors may want to consider other consumer-oriented stocks that could convert the market’s potential to more rapid 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 No. 3 in the market isn’t an obvious place to look for an outperforming stock. However, investors need to think carefully celsius (NASDAQ: CELH ). It stands out by marketing itself using natural ingredients. That approach helped it win a following with health enthusiasts.
Sales levels also supercharged after signing a distribution deal with PepsiCo. This increased its availability, allowing Amazon and outlets costco To sell your energy drinks in bulk.
Unfortunately, distribution issues caused its stock to fall more than 70% from last year’s highs as a major distributor, likely PepsiCo, drastically reduced its orders.
Nevertheless, the distributor will probably size its order properly in the future, possibly making this issue less of a factor. Additionally, sales managed to grow 5% to $1 billion in the first three quarters of 2024. While this is dramatically slower than the 104% annual growth in the first nine months of 2023, it is still growth.
Additionally, international purchases account for just 5% of Celsius’ revenue in the first nine months of 2024. Nevertheless, sales in the Europe and Asia-Pacific regions rose by a combined 38% year-on-year in the first nine months of the year. Given the growth potential of these markets, overall sales growth should improve as the company’s non-North American markets claim a higher percentage of sales.
Additionally, the stock price decline has taken its P/E ratio to 41, which is just off the multi-year low. Assuming overall sales growth at least matches its international growth rate over time, Celsius stock will likely move past recent distribution hurdles and resume its highs.
Alternatively, if investors prefer to outperform Amazon in their industries, they may want to turn to the company widely regarded as the “Amazon of China.” alibaba (NYSE: BABA).
Fears of another trade war with the U.S. are believed to have depressed the stocks of China-based companies, despite Alibaba’s lack of exposure to the U.S., a slowing economy in China and roughly $100 billion between 2021 and 2023. Regulatory violations were weighed down with 3.8 billion in fines. Important on its stock.
However, given Alibaba’s performance, one has to wonder if the sell-off has gone too far. The stock is down almost 75% from its all-time high in 2020 and is also down 10% from its IPO in 2014!
The decline has left it with a P/E ratio of just 17, far lower 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 is likely to experience.
Indeed, one could argue that Alibaba has become cheap for a reason. Its revenue in the first six months of fiscal 2024 was $68 billion, up 5% from year-ago levels. This is a dramatic pullback from the same period in 2021 when annual revenue growth was 31%.
Still, net income of about $10 billion for the first six months of 2024 is up 13% from year-ago levels. So, with higher levels of growth, Alibaba’s profits appear to be growing too fast to justify its rock-bottom forward P/E ratio. If the negative sentiment surrounding Alibaba fades over the course of the year, this factor alone could quickly boost the stock’s price.
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John Mackey, former CEO of Whole Foods Market, is a member of the board of directors of The Motley Fool, an Amazon subsidiary. Will Healy The designations are in Celsius. The Motley Fool features and recommends Amazon, Celsius, and Costco Wholesale. The Motley Fool recommends Alibaba Group. Motley Fool has a Disclosure Policy.
