2 “Magnificent Seven” Stocks at All-time Highs That I Would Buy Immediately - Latest Global News

2 “Magnificent Seven” Stocks at All-time Highs That I Would Buy Immediately

While it’s hard to argue that this would be the case for most of the Magnificent Seven stocks bad When it comes to long-term investments, there are two in particular that I would definitely buy now. Amazon.com (NASDAQ:AMZN) is trading just 2% below its all-time high, but its profitability is still at a relatively early stage.

The other is alphabet (NASDAQ:GOOGL)(NASDAQ:GOOG), the parent company of Google. In fact, as I write this, Alphabet just hit a new all-time high (on May 16), and its recent results have given investors plenty to smile about.

Here’s a rundown of why I would buy both in a heartbeat (I already own Amazon), despite their strong recent performance.

Amazon’s business has been impressive lately

Amazon is a company that doesn’t need much introduction, with a dominant share of the US e-commerce market and the leading cloud services company (AWS). Long-term investors have been richly rewarded for their patience, but the company could still have plenty of room for growth on both sides.

On the e-commerce side of the business, Amazon.com is the clear leader, with a larger e-commerce market share in the United States than its next ten competitors combined. However, e-commerce only accounts for about 15% of retail sales in the U.S. today, with even smaller percentages in some of the other markets where the company operates. And although Amazon Web Services (AWS) is the leader in cloud services, the global cloud computing market is about $500 billion in 2023 but is expected to grow to $500 billion five times reach this level by 2032.

Not only does Amazon still have huge growth potential, but CEO Andy Jassy’s plans to improve efficiency are starting to pay off. In the last quarter, Amazon’s operating income increased by more than tripled This is due to particularly strong growth in AWS and advertising revenue, both of which are high-margin businesses.

An absolute ATM with room for growth

Unlike Amazon, Alphabet is already an extremely profitable company. Its main subsidiary, Google, owns some of the world’s most dominant platforms and applications, including the massive Google search business, YouTube, Gmail, Chrome, Android and many more. There is also the Google Cloud business, which is a direct competitor to AWS.

While some of Google’s businesses are quite mature, there is still a lot of room to optimize the advertising business, which is where non-cloud companies make most of their money. And we’ve already mentioned the huge growth potential of cloud services over the next decade.

It’s important to realize that all of Google’s businesses have incredible margins. Over the last four quarters, Alphabet has achieved an increase of 26%. network Margin. In 2023, Alphabet generated nearly $74 billion in net income, and the company has about $108 billion in cash and short-term investments on its balance sheet. So not only does the company have plenty of financial flexibility to take advantage of opportunities, it is also returning a lot of capital to shareholders through buybacks and has just declared its first dividend.

An all-time high does not mean the same as “expensive”

Of course, these are not cheap stocks. Alphabet trades at about 30 times forward earnings expectations, and Amazon’s P/E ratio is significantly higher. Together they have a market capitalization of over $4 trillion.

However, it is important for investors to know that a high price does not necessarily mean a stock is expensive. These are two proven winners with plenty of future growth potential, and I wouldn’t be surprised to see both deliver above-average returns in the coming years.

Should you invest $1,000 in Amazon now?

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Suzanne Frey, an executive 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. Matt Frankel holds positions at Amazon. The Motley Fool holds positions in and recommends Alphabet and Amazon. The Motley Fool has a disclosure policy.

2 “Magnificent Seven” Stocks at All-Time Highs I’d Buy Right Now was originally published by The Motley Fool

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