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When it comes to the stock market, sometimes the largest gains can be had by buying shares of quality companies after they’ve suffered steep price declines. The recent bear market has been particularly vicious, but it has brought about some fantastic profit opportunities.
Read on to learn about two of the best growth stock bargains available in the market today.
2022 was a rough year for Amazon.com‘s (AMZN 0.28%) investors. Slowing e-commerce sales, supply chain disruptions, inflationary cost pressures, and recession fears all weighed on the retail titan’s results. Amazon’s stock price was cut in half.
Therein lies the opportunity for investors, who now have the chance to scoop up shares of this elite business at a heavily discounted price.
The macroeconomic challenges that have dented Amazon’s profitability are likely to prove temporary. However, the e-commerce juggernaut’s long-term growth drivers should persist well into the next decade.
In addition, Amazon Web Services (AWS) is the leading provider of infrastructure services in a cloud computing market that’s set to more than triple in size to over $1.5 trillion by 2030, according to Grand View Research. Meanwhile, Amazon continues to dominate an online retail market that’s projected to approach $7.4 trillion by 2025, up from $5.5 trillion in 2022, according to eMarketer. Better still, Amazon’s massive user base has enabled it to become a powerful force in a digital advertising industry that is estimated to exceed $876 billion by 2026, up from $602 billion in 2022.
With strong competitive positions in not one, not two, but three enormous and rapidly growing markets, it’s likely only a matter of time before Amazon’s profits return to their upward trajectory. Buying shares today could position you to profit alongside the e-commerce and cloud computing king.
Like Amazon, Rivian Automotive (RIVN 11.52%) endured a difficult 2022. The electric vehicle maker fell short of its production goal last year, largely due to supply chain problems. Higher raw material costs also took a heavy toll on Rivian’s financial results. These factors contributed to an over-80% decline in Rivian’s share price last year.
Although Rivian’s stock chart might not be pretty, the EV upstart’s tremendous growth potential is still intact. In 2022, U.S. EV sales soared 60% year over year to 807,180 vehicles, according to an article in The Wall Street Journal. Yet those EV sales still represented less than 6% of total vehicles sold last year. With climate change concerns mounting, battery technology improving, and governments implementing tax and other incentives to spur adoption, EVs are likely to account for a far larger portion of the automotive market in the coming years.
Rivian intends to capture its share of this booming industry. As of Nov. 7, it had more than 114,000 preorders for its popular R1T pickup truck and R1S SUV.
Additionally, Rivian has an order for 100,000 commercial vans from Amazon, which it plans to deliver by 2030. Rivian’s vans have received rave reviews from delivery drivers for their safety features, technology upgrades, and ease of use.
Amazon also made a large investment in Rivian. The e-commerce leader owns approximately 17% of the EV company’s shares, which gives Amazon a vested interest in Rivian’s success.
Yet after its steep decline over the past year, Rivian’s stock price is near all-time lows. The market is currently valuing its business at about $14 billion, which is not much higher than the $13.3 billion in cash and equivalents Rivian had as of Sept. 30. Although the EV company has no doubt used some of those funds to scale production, investors can currently buy its stock at a price that’s just marginally above the amount of cash-per-share that Rivian last reported.
With the market discounting Rivian’s odds of success, investors who buy today stand to be richly rewarded if the EV maker can exceed the low expectations currently reflected in its stock price. Considering that Rivian has a huge order backlog, a cash-rich balance sheet, and Amazon’s support, that seems like a solid bet to make.
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Joe Tenebruso has the following options: long January 2025 $100 calls on Amazon.com. The Motley Fool has positions in and recommends Amazon.com. The Motley Fool has a disclosure policy.
*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.
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