2 growth stocks to buy now

Businesses don’t systematically beat the market by following the beaten track. Instead, they create value for their shareholders by tackling existing markets in exciting new ways. Amazon (NASDAQ: AMZN) and Revolution group (NYSE: RVLV) are doing the trick as they revolutionize the e-commerce and cloud computing industries. Read on to find out why these stocks could overload your investment portfolio.

Amazon

With consistent double-digit growth and a proven blue-chip business, Amazon has the best of both worlds. And despite weaker-than-expected second-quarter earnings, the e-commerce giant can maintain its long-term success thanks to the continued dominance of its industry-leading cloud computing business, Amazon Web Services (AWS).

Second-quarter revenue rose 27% to $ 113 billion, which isn’t too bad for what is already the third-largest company in the world by sales. Amazon predicts third-quarter revenue of $ 106 billion to $ 112 billion, which at midpoint is up 13% from a year earlier, but lower than the consensus estimate of $ 119 billion of dollars.

The forecast led to a 5% drop in the stock, which could be an entry point for new investors who keep a long-term perspective and ignore the bumps in the road.

Image source: Getty Images.

Amazon will face some tough competition this year in its e-commerce segment as the tailwinds related to the pandemic recede. But the company’s long-term thesis remains intact, especially for its high-margin cloud computing segment, which accounts for 54% of operating profit.

AWS saw an impressive 37% growth to reach $ 14.8 billion during the period. And with analysts expecting the cloud storage market to grow at a compound annual growth rate of 22% through 2027, as more businesses shift from on-premises storage, Amazon has many leads with this opportunity. The company is still exploiting its first-come advantage, with a 32% market share versus 19% for Microsoft Azure, its closest rival.

Revolution group

With shares up 129% year-to-date, Revolve Group has rebounded tremendously from the coronavirus pandemic. Granted, with a market cap of $ 5.3 billion, the company is no longer cheap. But the fast-growing online fashion retailer can maintain its momentum with its innovative growth strategy focused on social media and booming profitability.

The United States has reopened, which means Revolve Group’s business model can shine. Instead of relying on traditional advertising methods such as advertisements or billboards, the company has fully embraced the influencer economy, pampering a network of over 3,500 influencers to promote its brand and apparel. to their subscribers. Now that people are back to social outings, Revolve reports an increase in the acquisition of new customers and the reactivation of previously inactive accounts.

Second-quarter net sales rose 60% to $ 229 million, while profits climbed 122% to $ 31.5 million. The company’s Forward segment, which focuses on selling established designer brands, is doing particularly well, with sales up 151% year-over-year to $ 40 million.

Management has not provided advice, but they expect continued success as they invest in inventory and marketing. With a futures price / earnings ratio of 82, Revolve Group shares are more expensive than traditional clothing brands like The hole, which trades for a P / E of just 19. But the company deserves its premium valuation because of its rapid growth and unique marketing strategy, which can help support its expansion.

What is your investment strategy?

Amazon and Revolve Group offer innovative strategies to create value in their respective industries, but they are suitable for different investment approaches. Amazon is best for investors who prefer a stable, proven business, while Revolve might offer more potential for multi-bagging returns because it’s much smaller and faster growing.

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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of the board of directors of The Motley Fool. Teresa Kersten, an employee of LinkedIn, a subsidiary of Microsoft, is a member of the board of directors of The Motley Fool. Will Ebiefung has no position in the mentioned stocks. The Motley Fool owns stock and recommends Amazon, Microsoft and Revolve Group Inc. The Motley Fool recommends the following options: $ 1,920 long calls in January 2022 on Amazon and $ 1,940 short calls in January 2022 on Amazon. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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