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the Standard & Poor's 500 The index has risen 31% over the past year, but there are several large companies with bright prospects poised for further gains. If you have an extra $1,000 to invest, invest that money in a well-selected group of… Growth stocks It can work wonders for your savings goals down the road.
To get started, read why three Motley Fool contributors believe Amazon (Nasdaq: AMZN), Rs (NYSE: R)And Shopify (NYSE: STORE) Your money can grow for years to come.
The story of this winning stock is not over yet
Jennifer Seibel (Amazon): Amazon has already created enormous shareholder wealth for those who invested early enough. It has been one of the best stocks to ever own on the stock market, and is up 82% over the past year alone.
But there is much more to come. Amazon is a forever stock, and it has many opportunities coming from its various businesses.
It's still the king of e-commerce that started the whole story, and e-commerce continues to increase as a percentage of total retail sales. Amazon is better positioned than any other company to capitalize on this organic growth engine. It already accounts for more than a third of e-commerce in the United States, and no other company comes close to its market share. It keeps upgrading its systems to improve and maintain a wide distance from competitors. It's providing more deliveries to more customers overnight, and adding millions of products so shoppers don't have to go anywhere to get what they need.
Likewise, Amazon Web Services (AWS) has a leading position in cloud computing and is launching powerful, generative AI tools that make it competitive. It is the preferred solution for high-profile companies such as Walt Disney And Verizon Communications, and has a strong pipeline of new clients and expanded deals. AWS is a high-margin business that represented 54% of total operating income in Q4 2023.
It is developing other new businesses, such as advertising, which is its fastest growing sector. Total revenue was up 14% year over year, while advertising was up 27%. It's also a high-margin business that helps drive profits, and CEO Andy Jassy said it's “still early days.”
Even if you've missed out on Amazon's gains so far, you can still buy today and enjoy years of growth.
Proven winner at the turn
Jeremy Bowman (RH): It's been a tough couple of years for RH, the upscale home furnishings company formerly known as Restoration Hardware, but there are signs that it's finally closing in on what CEO Gary Friedman called “the most challenging housing market in three decades.” “
Recent results have also suffered with net income falling sharply over the past year, but this sets the company up for a recovery, and Friedman expects RH to gain significant market share this year.
2024 is set to be a transformational year for the company as it launches “the most compelling product transformation and platform expansion in history.”
RH has also been aggressively buying back its shares to take advantage of the recent sell-off, which also sets it up well for a recovery. In 2023, it reduced its outstanding shares by 20%, and over the past two years, its outstanding shares decreased by 35%.
The company continues to expand its physical retail presence, unlike most of its peers, with plans to add five new design showrooms in North America, and two more internationally. The company is also doubling down on marketing in anticipation of the rebound, doubling distribution of reference books and increasing advertising in design publications.
RH has outperformed the S&P 500 by a wide margin over its history, and appears to be entering another growth cycle as it ramps up its marketing efforts and takes advantage of an expected decline in interest rates and a rebound in the housing market.
With an expected return to growth and a significant decline in outstanding shares, RH's earnings are likely to rise over the next few years.
Shopify's growth story continues to get better
John Ballard (Shopify): The leading online shopping and payments platform has compiled several strong earnings reports. The stock is up 73% over the past 12 months, but as the company begins to expand its offerings, it could enter a profitable period of growth to reward shareholders.
Shopify is not just a platform that helps businesses create an online storefront. It also continues to introduce new features for its Shop app, which serves as a mobile storefront for small businesses and a powerful shopping assistant for consumers. The app's gross merchandise volume reached $100 million in a single month during the fourth quarter.
Shopify's POS solutions for physical retail locations are another catalyst for emerging growth. The company's offline gross merchandise volume (GMV) grew 28% year over year in Q4 2023 — faster than Shopify's total GMV, which grew 23%.
Another opportunity is business to business (B2B) solutions. Shopify Collective is a new service that allows merchants to source products from other brands and ship them directly to customers. B2B represents a $450 billion opportunity and management expects it to be a major driver of growth in 2024.
Through these services, Shopify is casting a wider net to win not only a greater share of e-commerce spending, but increasingly, of the entire commerce market as well. The stock offers plenty of long-term upside.
Should you invest $1,000 in Amazon now?
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*Stock Advisor returns as of March 25, 2024
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Jennifer Seibel He has positions at Walt Disney. Jeremy Bowman He has positions at Amazon, RH, Shopify, and Walt Disney. John Ballard He has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Shopify, and Walt Disney. The Motley Fool recommends RH and Verizon Communications. The Motley Fool has Disclosure policy.
3 handy stocks you can buy now for $1,000 and hold forever Originally published by The Motley Fool
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