We recently published a list of 10 Stocks with Consistent Growth to Buy. In this article, we are going to take a look at where Amazon.com Inc. (NASDAQ:AMZN) stands against other stocks with consistent growth to buy.
Currently, financial markets are experiencing a mix of optimism and caution as investors react to changing economic conditions. Many are closely watching trends and data that could impact future growth and stability.
Tom Lee, managing partner and head of research at Fundstrat Global Advisors, recently shared his insights on the current market trends during an interview on CNBC’s ‘Squawk Box’ on October 14. He acknowledged that he underestimated the strength of the market, noting that it has been surprisingly resilient despite expectations of volatility leading up to the 2024 election. Lee highlighted that there is a significant amount of cash—about $6 trillion—sitting on the sidelines, which has contributed to the market’s stability. He observed that many investors had anticipated a recession, but instead, companies have shown strong earnings and resilience.
Lee also mentioned that the Federal Reserve is likely to adopt a supportive stance as inflation data continues to trend toward their 2% target. He believes that regardless of who wins the upcoming election, stocks are likely to perform well in the following year. Lee pointed out that markets tend to thrive on visibility and certainty, suggesting that if one candidate appears to be gaining an advantage, it could lead to a more favorable trading environment before the election. Overall, he remains optimistic about the market’s outlook.
S&P 500 and Dow Reach New Heights Ahead of Election Season
On October 18, both the S&P 500 and the Dow Jones Industrial Average reached new record highs, marking six consecutive weeks of gains for these major indices. As reported by CNBC, the S&P 500 rose by 0.40%, closing at 5,864.67, while the Dow rose by 0.09% and added 36.86 points to close at 43,275.91. The Nasdaq also performed well, increasing 0.63% to close at 18,489.55. This marks the longest winning streak of the year for both the Dow and S&P 500, with notable increases in their overall performance.
As earnings season progresses, over 70 companies in the S&P 500 have reported their results, with about 75% of those companies surpassing expectations. Despite potential market volatility leading up to the upcoming election, some analysts believe that stocks may continue to rise through November.
Rob Williams, a chief investment strategist at Sage Advisory, noted that this trend is unusual for an election year, where markets typically hesitate before improving post-election. He suggested that investors might be optimistic about a possible victory for Republican nominee Donald Trump, whose policies are seen as more favorable for businesses in terms of regulations and taxes.
Methodology
To compile our list of the 10 stocks with consistent growth to buy, we used the Finviz and Yahoo stock screeners. We sorted our results based on market capitalization and picked the top 30 stocks.
Next, we focused on identifying stocks that had demonstrated consistent growth. From the initial list, we narrowed our choices to stocks that have grown their revenue positively over the past 5 years. We further refined our selection to include only those that had positive revenue growth each year in their last five reported annual revenues.
To ensure the reliability of our findings, we consulted reputable sources such as SeekingAlpha, which provided insights into the revenue CAGR over the past five years, and Macrotrends, which offered information on historical annual revenue data. Finally, we have ranked the 10 stocks with consistent growth to buy below in ascending order based on their five-year revenue CAGR.
Additionally, we mentioned the hedge fund sentiment surrounding each stock, which was taken from Insider Monkey’s database of 912 elite hedge funds as of Q2 of 2024.
Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A customer entering an internet retail store, illustrating the convenience of online shopping.
Amazon.com Inc. (NASDAQ:AMZN)
5-Year Revenue CAGR: 19.11%
Number of Hedge Fund Holders: 308
Amazon.com Inc. (NASDAQ:AMZN), or simply Amazon, is a leading online retailer and technology company that ranks high on our list of the 10 stocks with consistent growth to buy. The company offers cloud computing services through Amazon Web Services (AWS), which provides businesses with scalable computing power and storage solutions. Additionally, Amazon has ventured into digital streaming with services like Prime Video and Amazon Music, further diversifying its business model and enhancing customer experience. The company also specializes in online advertising and artificial intelligence (AI).
The company is strategically positioning itself for future growth by heavily investing in AI and expanding its core services. Amazon.com Inc. (NASDAQ:AMZN) has introduced a variety of AI-powered features, such as the shopping assistant Rufus for US mobile customers. The company has also launched Maestro for music playlist generation and improved search functionalities for Fire TV, indicating a comprehensive integration of AI across its platforms.
Amazon.com Inc. (NASDAQ:AMZN) has also expanded its geographical reach with initiatives like launching its Stores business in South Africa, offering same and next-day delivery. The company is also enhancing its healthcare services through Amazon Pharmacy’s RxPass program, which provides affordable access to essential medications for Prime members on Medicare. These moves reflect the company’s commitment to diversifying its offerings and tapping into new markets.
A key driver of Amazon.com’s (NASDAQ:AMZN) growth is its cloud computing business. In Q2 2024, the Amazon Web Services (AWS) segment saw a remarkable 19% year-over-year increase in sales. Growth was largely driven by the growing demand for cloud services as companies modernize their infrastructure and embrace AI technologies. Recently, the company introduced new AWS Graviton4-based compute instances that offer up to 30% better price performance compared to previous models, enhancing its appeal to businesses looking to optimize costs. Amazon.com Inc. (NASDAQ:AMZN) has also signed new AWS agreements with major organizations, including the Commonwealth Bank of Australia and Eli Lilly.
Financially, Amazon.com Inc. (NASDAQ:AMZN) has shown robust performance with a 10% increase in net sales to reach $148 billion in Q2 2024 compared to the same period last year. Notably, the AWS segment contributed $26.3 billion, highlighting its strength as a leading cloud service provider. With increasing demand for cloud services and AI capabilities, AWS continues to attract major clients and partnerships, reinforcing its position as a critical revenue driver.
In the last five years, Amazon has achieved a revenue growth rate of 19.11% annually, while its net income has grown at an average rate of 29.71% during the same period.
According to Insider Monkey’s database, Amazon.com Inc. (NASDAQ:AMZN) has attracted increased interest from institutional investors, with 308 hedge funds holding stakes in the company as of Q2 2024, up from 302 in Q1 2024.
Overall, AMZN ranks 4th on our list of stocks with consistent growth to buy. While we acknowledge the potential of AMZN, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than AMZN but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.