The Ultimate Growth Stock to Buy With $1,000 Right Now

Investors looking to put money to work in stocks might be discouraged by the fact that the market is in record territory. Investors appear to be extremely bullish, despite the uncertain economic environment.

But if you have $1,000 you're ready to invest, there are still worthy opportunities to take advantage of, like this top e-commerce and cloud computing enterprise that might be the ultimate growth stock. That dollar amount could get you approximately five shares in this business.

Growth pillars

The company that investors should look to scoop up with $1,000 is none other than Amazon (NASDAQ: AMZN). Its shares have skyrocketed 1,000% in the past decade, far outpacing the broader Nasdaq Composite index. But it still looks like a compelling investment opportunity.

That's because Amazon has multiple growth pillars that can lift it to new heights in the years ahead. The company is known for its bread-and-butter e-commerce operations. In the first three months of 2024, 62% of total revenue, or $89 billion, was derived from online stores and third-party seller services, indicating tremendous scale.

However, because 84% of all retail sales in the U.S. are still represented by physical commerce, there remains a sizable runway for e-commerce to grow. And as the leader in the industry, with an unmatched logistics infrastructure and broad product assortment, Amazon is poised to capture a large portion of that opportunity.

Cloud computing is likely going to drive even greater growth for the business on a percentage basis. Amazon Web Services (AWS), the industry leader, generated $94 billion in sales in the past 12 months. As businesses start to invest more capital into on-demand and off-premises tech solutions, AWS stands to gain. Moreover, this division is set to drive the lion's share of Amazon's operating profit growth, especially since it posted a stellar margin of 37.6% in the first quarter.

Most investors probably aren't familiar with the fact that digital advertising raked in $47 billion in annualized revenue in the last quarter. With its popular e-commerce site and Prime Video streaming service, Amazon has the digital channels to sell targeted ads. Given that the digital advertising industry is set to expand at a rapid pace in the years ahead, this provides the business with yet another powerful growth engine.

Rising profits

Amazon is known for not prioritizing its bottom-line performance. Its net income trajectory hasn't been anything to write home about. And the market has usually given the company the benefit of the doubt because management has focused aggressively on reinvesting capital back into the company to drive growth.

But things might be changing, particularly as this higher-rate environment could result in investors demanding financial fortitude. Thanks to cost cuts and ongoing operational improvements, Amazon reported operating income of $15.3 billion in the first quarter. That figure was up a jaw-dropping 219% from the year-ago period.

According to Wall Street consensus analyst estimates, Amazon is projected to produce $96.8 billion in operating income by 2026, nearly three times 2023's total. The potential for an improving earnings profile is certainly something that can excite shareholders.

Valuation

Despite Amazon generating $575 billion in 2023 sales and carrying a market cap of almost $2 trillion, it's still a smart idea to consider buying this stock. I already mentioned Amazon's growth potential, both from a top- and bottom-line perspective.

Additionally, shares are reasonably valued right now. They trade at a price-to-sales ratio of 3.3. This is roughly in line with the stock's trailing-five-year average valuation multiple. Clearly, things don't look overstretched at all.

A $1,000 investment can give you exposure to one of the world's most dominant companies. This could prove to be a lucrative financial decision a few years down the road.

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

Before you buy stock in Amazon, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Amazon wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $767,173!*

Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. TheStock Advisorservice has more than quadrupled the return of S&P 500 since 2002*.

See the 10 stocks »

*Stock Advisor returns as of June 10, 2024

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Neil Patel and his clients have no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.