Should You Move On from Amazon Stock? Here Are Two Alternative Stocks Worth Considering

Many investors have been amazed at the strength of Amazon. Even with its enormous size, Amazon has consistently shown impressive growth in various sectors, including e-commerce, cloud computing, and more recently, artificial intelligence (AI).

However, with a market cap that has crossed $2.3 trillion, achieving high growth rates may soon become challenging. As a result, it might be wise for investors to look at other consumer-focused stocks that have better prospects for rapid expansion. Below are two stocks that could offer greater returns than Amazon.

Celsius

At first glance, investing in Celsius (CELH -7.76%)—a company that ranks third in the energy drink market—might not seem appealing. Yet, Celsius distinguishes itself by using natural ingredients in its products, which has attracted a loyal customer base among health-conscious consumers.

The company's sales saw significant growth following a distribution agreement with PepsiCo. This deal improved the product's availability, enabling retailers like Amazon and Costco to sell Celsius drinks in larger quantities.

Unfortunately, the stock has seen a decline of over 70% from its peak last year due to distribution challenges. One of its major distributors, PepsiCo, cut down on orders significantly.

Nevertheless, it is likely that distribution will stabilize in the future, minimizing these issues. Furthermore, Celsius has generated $1 billion in sales during the first three quarters of 2024, demonstrating a year-on-year growth of 5%. While this rate is significantly lower than the 104% growth seen in 2023, it still indicates a positive trend.

Interestingly, international sales accounted for only 5% of Celsius's revenue in the initial three quarters of 2024. However, the growth in the European and Asia-Pacific markets was impressive at a combined rate of 38% year-on-year. The company’s expansion in non-North American markets suggests that overall sales could increase significantly moving forward.

With the stock price drop, Celsius's P/E ratio now stands at 41, which is near multi-year lows. If sales can match the growth rates observed in international markets, Celsius is likely to recover from its recent setbacks and ascend in value once again.

Alibaba

For those looking to compete with Amazon within its own industries, Alibaba (BABA -3.78%) is an intriguing option. Often dubbed the "Amazon of China," Alibaba's stock has suffered due to concerns over a possible trade war with the U.S., despite the company not being heavily reliant on the U.S. market. Additionally, a slowing Chinese economy and substantial fines totaling nearly $3.8 billion from 2021 to 2023 for regulatory issues have weighed on Alibaba's stock.

Despite these challenges, the significant drop in Alibaba’s stock price—down almost 75% from its all-time high in 2020—raises questions about whether the decline is overblown. The stock is now trading around 10% below its IPO price in 2014.

This downturn has resulted in a low P/E ratio of 17 compared to Amazon's much higher ratio of 48. Moreover, with a forward P/E ratio of just 10, investors may not be recognizing the growth potential Alibaba has ahead.

While Alibaba has indeed experienced a slowdown, with revenue increasing by only 5% to $68 billion in the first six months of fiscal 2024, its net income has risen by 13% during the same period, reaching nearly $10 billion. Even amid lower growth, the rapid climb in profits does not justify the low forward P/E ratio, indicating that the stock could see significant price growth if market sentiment improves.

John Mackey, the former CEO of Whole Foods Market, an Amazon subsidiary, is on The Motley Fool’s board of directors. Will Healy holds positions in Celsius. The Motley Fool has positions in and recommends Amazon, Celsius, and Costco Wholesale. They also recommend Alibaba Group.

Amazon, Celsius, Alibaba