The ultimate growth stock to buy for $1,000 right now

The S&P 500 and Nasdaq Composite Index rose by 20% and 19% respectively in the first eight months of the year. With these two major indices in record territory, investors may be concerned that there are no attractive opportunities to strengthen their portfolios.

I do not agree with this assumption. In fact, there is a dominant enterprise that looks like the best growth stock to buy with $1,000 right now. I’m talking about the titan of technology Amazon (AMZN -3.65%). Let’s take a closer look.

Driven by technological trends

Investors will note that numerous technology-driven trends have shaped the economy. Gaining exposure to these areas can lead to solid returns. Fortunately, Amazon is perfectly positioned to benefit from many of these tailwinds.

The company is a dominant force in online shopping, having gone from accounting for 6.3 percent of total U.S. retail sales to now a 16 percent share over the past decade. As the industry continues to grow in the coming years, Amazon should capture a sizable portion of that growth, given that nearly 40 percent of all online spending in this country occurs on its popular marketplace site.

Amazon Web Services (AWS) has been a leader in the cloud computing industry for a long time. AWS currently has a 32% share of the global market, gaining from higher spending on off-premise IT infrastructure. This has typically been the company’s main driver of growth and profitability. Revenue rose 19% in Q2 (ended June 30), with stellar operating margin of over 35%. AWS also provides business with a valuable platform to invest in as well introduce AI-related features to its corporate customer base.

Two other secular trends propel this business that might go unnoticed. Amazon Prime Video is a top streaming option. Given the popularity of this platform, as well as the billions of visitors who go to Amazon.com every month, the company is also rapidly climbing the digital advertising market. It grossed $12.8 billion here in Q2, up 20% year over year.

It’s hard to believe that with its huge 12-month revenue of $604 billion, Amazon can continue to grow. But that is exactly what is likely to happen. According to Wall Street estimates, the business is expected to grow its revenue by 10.7% on an annual basis between 2023 and 2026.

Quality at a reasonable price

Amazon clearly has a strong foothold in various secular trends in the technology-driven economy. As a result, it’s a high-quality business that should probably be on every investor’s watch list.

One of the main reasons why this is a great company is the presence of several sustainable competitive advantages. The Amazon marketplace benefits from strong network effects. As more merchants sell goods on the site, it can attract more buyers and vice versa. And all this activity attracts advertising dollars.

The company’s massive scale has also led to huge cost advantages, especially with Amazon’s extensive and well-developed logistics system. The massive investment in capacity development has paid off as the business can rely less on third-party logistics services, which reduces costs. And because it fulfills so many orders, Amazon can better leverage its fixed costs.

Investors were attracted by the company’s impressive growth trajectory. However, the business is starting to show improvements in the bottom line thanks to a focus on efficiency and cost reductions.

Amazon reported operating income of $30 billion in the past six months, up 140 percent from the same period last year. Executives expect 18% year-over-year growth in the current (mid) quarter. This is a slowdown, but it’s still a solid clip.

The stock trades at a price-to-sales ratio of 3.1. This is roughly in line with its trailing five- and 10-year averages, making this growth stock an excellent buy right now.