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

Warren Buffett is known for allocating capital with a value-focused mindset. This strategy has worked well for the big investor over the past few decades.

However, it appears that many investors are attracted to businesses that are experiencing rapid sales and earnings. These companies can turn out to be big winners. And even though the market is in record territory right now, there are still opportunities to take advantage of.

Here’s why Amazon (AMZN 2.50%) is the supreme growth stock to buy with $1,000 right now.

Increase sales and profit

This company benefits from some strong secular trends, all driven by the ways technology is changing the economy. Amazon has long been a leader in e-commerce. And today, nearly 40% of all online spending in the US goes through the company’s website. There is still considerable runway for expansion to take share from brick-and-mortar retail.

With Amazon Web Services (AWS), the business holds the leading market share in the important cloud computing industry. This segment has typically been the driver of growth, as sales here rose 19% last quarter (Q2 ended June 30). Grand View Research believes the global cloud market will be worth $2.4 trillion by 2030, up from $602 billion last year, giving AWS a favorable backdrop to continue expanding.

These two dominant areas of the business help explain why Amazon’s revenue grew at a compound annual rate of 22.7% between 2013 and 2023. Even in 2022, a year in which higher interest rates hit many companies, this business however saw a 10% Sales Increase. That Federal Reserve becomes more accommodating, that number could rise faster.

Historically, Amazon has held off on posting significant earnings in the name of investing aggressively in growth initiatives. This obviously worked wonders as the business saw its share price absolutely explode. But in recent years, Amazon has focused more on increasing profits. And investors should be very pleased.

Operating income totaled $30 billion in the first six months of this year. This represented a whopping 141% year-over-year jump. Management is trying to create a more efficient organization, especially after Amazon invested heavily in the depths of the pandemic to expand its logistics network.

Wall Street is very bullish as it forecasts annual sales and earnings per share growth of 10.7% and 36.5%, respectively, between 2023 and 2026. A combination of sustained double-digit revenue growth and strong profit gains is exactly what shareholders want to see. from any business they want to own.

Worth the price

Amazon’s fundamental drivers are in place. However, the assessment should also be considered before making a decision.

At the time of writing, the stock is trading forward price-earnings ratio Ratio (P/E) of 38.9. That doesn’t seem like a bargain. In fact, it is 21% more expensive than the total Nasdaq-100 index.

In my opinion, however, Amazon is worth paying what appears to be a premium valuation. As mentioned above, the result is set to expand rapidly in the coming years, which will make the forward P/E multiple look more attractive.

In addition, it is not difficult to argue that this is not so risky for a business. Over the years, Amazon has developed a broad economic moat that continues to protect it from the threat of competition and disruption. The company has unparalleled scale with its logistics operations, the online marketplace possesses strong network effects, and the Amazon brand is a key competitive asset that is extremely valuable.

It’s true that sometimes sound investment ideas can be hidden in plain sight. Amazon is a clear example of this.