Growth stocks are shares in companies that increase revenue and earnings faster than average. And they are an excellent way to earn market-beating returns in the stock market. Let's explore some reasons why Amazon.com (AMZN -1.44%) and Curiosity Stream (CURI -7.14%) have what it takes to supercharge your investment portfolio.
1. Amazon
With a market cap of $1.74 trillion, Amazon is already one of the most successful growth stocks of all time, and its bull run is still in full swing. The e-commerce giant trades at a reasonable valuation. And it can power continued long-term expansion because of strength in its Amazon Prime subscription service and pivots to new markets like healthcare.
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Amazon is working hard to keep its Amazon Prime subscription service ahead of the competition through unique features. The platform currently boasts 200 million subscribers, with an impressive 175 million streaming TV shows and movies in the past year. Streaming is not Prime's primary market (the platform is more geared towards discounts and faster shipping), but video can help boost Amazon's competitive moat against rivals like Walmart +, which offers a similar e-commerce service.
According to Insider, Amazon is also considering launching brick-and-mortar pharmacies in the U.S. Management hasn't commented on the rumor, but it would be a natural progression from the online delivery pharmacies Amazon launched in November. The U.S. pharmacy and drugstore market is worth $319 billion, making it a massive opportunity for Amazon to disrupt.
First-quarter revenue grew 44% to $108.5 while operating income surged 122% to $8.9 billion. Amazon's spectacular bottom-line expansion (powered by the high margin AWS segment, ) helps justify its P/E multiple of 48.
2. Curiosity Stream
Founded in 2015 and going public in Feb. 2021, Curiosity Stream is one of the latest startups attempting to crack the $50.11 billion video streaming industry. The company's unique market niche, rapid topline growth rate, and tiny market cap make it an excellent way for investors to bet on this transformational opportunity.
Unlike rivals such as Disney + and Netflix, which earn much of their revenue from fictional films and shows, Curiosity Stream focuses on non-fictional documentary content. This narrow focus gives the company much-needed differentiation and allows management to unlock synergies with other similar businesses. In May, the company acquired One Day University, an educational content company featuring over 500 talks from professors all over the country. This combination will help strengthen Curiosity Stream's moat and expand its content library.
First-quarter revenue jumped 33% to $9.9 million, and management expects sales to grow 80% to $71 million in full-year 2021. With a market cap of $720 million, the stock trades at just ten times expected revenue, which looks reasonable considering its rapid growth rate.
Despite the strong guidance, Curiosity Stream has been under pressure after Bank of America downgraded the stock to 'underperform' after it surpassed the bank's $14 per share price target (shares have since recovered). The analysts didn't provide any new negative information to justify their downgrade. And investors should focus on the long-term instead of getting distracted by short-term price fluctuations.
Betting on growth
Amazon and Curiosity Stream both offer outstanding growth in the e-commerce and video streaming industries. But Amazon is better for investors who want to bet on a proven business because of its track record of success. Curiosity Stream faces more uncertainty, but it offers the potential for multi-bagger returns as its operations expand.
