Should You Forget Amazon Stock? Why These Unstoppable Stocks Are Better Buys

Investors have long marveled at the resilience of Amazon. Despite its massive size, it has continued to return high levels of growth amid its leadership in e-commerce, cloud computing, and, more recently, artificial intelligence (AI).

Nonetheless, with a market cap now of over $2.3 trillion, it is likely approaching a point at which high-percentage growth will become more difficult. Thus, investors may want to consider other consumer-oriented stocks that can more easily turn market potential into more rapid growth. The following two stocks hold the potential to generate higher returns than the e-commerce and cloud giant.

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Celsius

Admittedly, an energy drink that is No. 3 in the market is not an obvious place to look for an outperforming stock. However, investors need to take a closer look at Celsius (NASDAQ: CELH). It stands out by marketing itself as using natural ingredients. That approach helped it win a following with health enthusiasts.

Sales levels also became supercharged after it signed a distribution deal with PepsiCo. That increased its availability, allowing outlets such as Amazon and Costco to sell its energy drinks in large quantities.

Unfortunately, distribution issues caused its stock to fall more than 70% from its high last year as a major distributor, likely PepsiCo, drastically reduced its orders.

Nonetheless, the distributor will probably right-size its orders in the future, likely making this issue less of a factor. Moreover, sales of $1 billion in the first three quarters of 2024 managed to grow 5%. While that is dramatically slower than the 104% yearly growth in the first nine months of 2023, it still constitutes an increase.

Additionally, international purchases only made up 5% of Celsius' revenue in the first nine months of 2024. Still, sales grew by a combined 38% annually in the Europe and Asia-Pacific regions 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 the sales.

Furthermore, the stock price decline has taken its P/E ratio to 41, a level just off multi-year lows. Assuming overall sales increases can at least match its international growth rate over time, Celsius stock will probably move on from the recent distribution disruptions and resume its march higher.

Alibaba

Alternatively, if investors prefer to outperform Amazon within its own industries, they may want to turn to the company widely perceived as the "Amazon of China," Alibaba (NYSE: BABA).

Admittedly, fear of another trade war with the U.S. has depressed the stocks of China-based companies, despite Alibaba's lack of exposure to the U.S. Also, a slowing economy in China coupled with almost $3.8 billion in fines between 2021 and 2023 for regulatory violations weighed significantly on its stock.

However, given Alibaba's performance, one has to wonder whether the sell-off is overdone. The stock is down by almost 75% from its all-time high in 2020 and is even down 10% from its IPO in 2014!

That decline has left it with a P/E ratio of just 17, far less 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 Alibaba has become cheap for a reason. Its revenue in the first six months of fiscal 2024 was $68 billion, a gain of 5% from year-ago levels. This is a dramatic pullback from the same period in 2021 when yearly revenue growth was 31%.

Still, the nearly $10 billion in net income for the first six months of 2024 surged 13% higher from year-ago levels. Hence, even with more muted growth levels, Alibaba's profits appear to be rising too fast to justify its rock-bottom forward P/E ratio. That factor alone could spark rapid stock price growth if negative sentiment surrounding Alibaba fades over the course of the year.

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Will Healy has positions in Celsius. The Motley Fool has positions in and recommends Amazon, Celsius, and Costco Wholesale. The Motley Fool recommends Alibaba Group. The Motley Fool has a disclosure policy.