The stock market rose by Nasdaq Composite up more than 27% since last June. The growth is a welcome development after the COVID-19 pandemic and economic downturn in 2022, which saw the same index fall 33% during the challenging year.
Investors have become optimistic as declining inflation and advances in emerging markets such as artificial intelligence (AI) could mean a lucrative future for many companies.
As leaders in the consumer market with billions of loyal users, Costco Wholesale (NASDAQ: COST) And Amazon (NASDAQ: AMZN) have promising prospects. Their shares are up 61% and 45% respectively over the past twelve months, but appear far from reaching their ceiling. Costco is expanding rapidly and has barely scratched the surface of its business abroad. Meanwhile, Amazon’s online retail business is booming, alongside heavy investments in AI.
So here are two rising stocks I would buy right now without hesitation.
1. Costco
Costco has come a long way since its founding 40 years ago, when it opened its first store in San Diego, California. The retail giant has won over consumers around the world with its unique model of offering access to wholesale pricing for the cost of an annual membership.
The company’s success has made it one of the best retail investments of the past five years, outperforming competitors such as Amazon, WalmartAnd Goal in stock growth. While past profits aren’t always an indication of what’s to come, recent profits point to a lucrative future for Costco.
The retail giant announced its fiscal third-quarter 2024 earnings results on May 30. Revenue for the period ended May 12 rose 9% year over year to $57 billion. International sales remained the biggest growth driver, with sales from abroad increasing by almost 9%, compared to 6% domestically.
Costco memberships rose 8% to more than 74 million in the third quarter, a promising performance considering the global renewal rate is 90%. The company has 878 locations in 14 countries and is adding more every year.
Costco is on an exciting growth trajectory that you don’t want to miss. And with a price-to-sales ratio (P/S) of 1.4, the company’s shares are excellent value and I would buy without hesitation.
2. Amazon
Amazon has created more than a few bulls in the past year, attracting investors with a booming e-commerce business and a growing role in AI.
Macroeconomic headwinds in 2022 led to a sharp decline in consumer spending, with Amazon’s retail sales particularly hard hit. However, an impressive recovery has proven the reliability of the company’s business model and its value as a long-term investment.
Amazon reported its first-quarter 2024 earnings on April 30. Revenue for the quarter rose 13% year over year, exceeding analyst expectations by $750 million. The most impressive growth, however, came in the form of operating income, which rose 221% to over $15 billion.
The retail company’s profits have soared over the past year thanks to positive growth in its retail segments and cost-cutting measures. For example, in the first quarter of 2024, Amazon’s international segment returned to profitability by posting operating income of $903 million, a significant improvement from the $1 billion in losses it posted the year before. Meanwhile, North American operating revenues rose 454% year over year.
Amazon’s e-commerce segments are expanding rapidly and show no signs of slowing down. However, the best reason to consider a long-term investment in Amazon is the highly profitable cloud company Amazon Web Services (AWS). The platform has a leading market share in cloud computing, a sector with huge growth potential amid an AI boom.
In the first quarter of 2024, AWS was responsible for 62% of Amazon’s operating revenue, despite earning the smallest share of revenue within its three segments. The cloud service gives the company a powerful role in technology and AI and will likely continue to drive profits for years to come.
This chart shows that Amazon’s price-to-earnings ratio is lower than many of its biggest rivals, indicating that its stock could be trading at a bargain. That fact, combined with a booming retail industry and a promising position in AI, makes Amazon a no-brainer at this point.
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Suzanne Frey, a director at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Dani Cook has no position in any of the stocks mentioned. The Motley Fool holds positions in and recommends Alphabet, Amazon, Apple, Costco Wholesale, Microsoft, Target and Walmart. The Motley Fool recommends the following options: long January 2026 $395 calls to Microsoft and short January 2026 $405 calls to Microsoft. The Motley Fool has a disclosure policy.
2 Rising Stocks I’d Buy Now Without Hesitation was originally published by The Motley Fool
