Ultimate Growth Stocks to Buy Now for $1,000

If you have $1,000 that you don't need to pay your bills or top up your emergency fund, you may want to consider investing it to help you turn that "big money" into more wealth. But which stocks will give you the most growth potential and still be a safe investment?

Sometimes the best stock to buy is one of the most recognizable and successful companies in the world.2023 At the beginning of the year, market sentiment towards theAmazon (NASDAQ resonance code: AMZN)Unfavorable. Its stock is trading at around $81, a far cry from its mid-2021 high of $187. Depending on how the market reacts, one might think that Amazon's best days are behind it.

However, looking at the results announced over the past year, Amazon has once again positioned itself as a stock worth investing in. The significant improvement in its financials has helped its stock price climb back up, and it's currently trading just shy of its 2021 highs. Even better, its future growth potential is as strong as ever.

Let's dive in and see what makes Amazon the best buy right now.

The Pandemic Boom and Its Impact on Amazon

On one side, Amazon benefits greatly from a pandemic-induced lockdown in 2020 and 2021. Online retailers such as Amazon have seen an incredible demand for their merchandise, as everyone is housebound and has limited access to stores. In the last two years, Amazon has met this demand with quarterly revenue growth of more than 20% year-over-year. however, as revenue growth has accelerated, so too has Amazon's capital spending, as it has spent billions of dollars to expand its distribution footprint and meet expectations for just-in-time delivery.

The impact of these expenses is evident in Amazon's operating performance. A comparison of the full-year operating revenues of Amazon's North American and International segments (including the e-commerce portion) clearly shows the impact of pandemic spending.

Data source: Amazon Amazon.

It is important to understand the details of this layer because Amazon's overall operating income has never turned negative due to Amazon Web Services (AWS), and AWS generates enough operating income to compensate for the impact on the e-commerce side of the business.

Amazon is back to normal.

Since the end of 2022, Amazon's business has been recovering. With pandemic-induced demand a thing of the past, Amazon's management has had to work hard to get back to normal. To put what Amazon is going through into perspective, Amazon has doubled its distribution footprint in two years. This level of spending in a short period of time would put any company in a financial crunch. Fortunately for shareholders, Amazon has done a great job of recovering.

Data Source: Amazon Amazon

Throughout 2023, Amazon's financial performance improved steadily, with North America generating $15 billion in operating revenue by the end of 2023, while international regions improved to a loss of $2.7 billion. Combined with AWS's $24 billion in operating revenue, this brings total operating revenue to $37 billion, a 200% increase from 2022.

Improved operating income also contributed to cash flow recovery, with free cash flow of $32 billion in 2023 compared to a free cash flow loss of $17 billion in 2022.

Why Buy Amazon Now?

At the end of 2022, Amazon's stock price is relatively cheap. Translating the calendar to 2023, Amazon's share price is only 1.7 times sales. This is the cheapest stock price since 2015. Today, Amazon's shares are trading at 3.4 times sales, which is much more expensive than before, but still in line with the historical average of the last 10 years. Amazon's revenue growth has returned to double digits, and given the recent improvement in the bottom line, Amazon's price today seems fair.

Should you invest $1,000 in Amazon right now?

Before buying Amazon stock, consider the following:

Motley Fool Stock AdvisorA team of analysts have just selected what they believe to be the most popular analysts in the world at the moment.-est (superlative suffix)The name of the person is suitable for the investor to purchase10Only ...... and Amazon is not one of them. The 10 stocks that made the list could generate huge returns in the coming years.

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*Stock Advisory Rates as of April 8, 2024

John Mackey, former Chief Executive Officer of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's Board of Directors; Jeff Santoro owns shares of Amazon; The Motley Fool owns shares of Amazon and recommends Amazon; The Motley Fool has a disclosure policy.

The Ultimate Growth Stocks to Buy Now for $1,000 was originally published by The Motley Fool.