Don't think a $5,000 investment can pay off? Consider this: If you had invested $5,000 in Netflix 10 years ago, you would have more than $42,000 today. Relatively modest investments in the right stocks can pay off big time.
So, let's look at two growth stocks that could have a similar payoff: Tesla (TSLA 0.23%) and Amazon (AMZN -2.33%).
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1. Tesla
Tesla is one of the best growth stocks to own right now. It's not just the stock's 95% year-to-date return, although that certainly doesn't hurt its case.
What makes Tesla such an attractive name among growth stocks is that the company continues to fulfill its idealistic mission statement. To date, it has manufactured and sold more than 4.5 million electric vehicles (EVs).
And those impressive production numbers continue to swell. CEO Elon Musk expects the company to make 1.8 million vehicles this year, up from 1.3 million in 2022 and 900,000 in 2021.
Image source: The Motley Fool
What's more, rising production numbers have knock-on effects in other segments within Tesla. Revenue from the company's energy generation and storage segment rose 74% year over year to $1.5 billion in its most recent quarter (ending on June 30). And revenue from its services and "other" segment, led by rising repair costs for existing vehicles, jumped 47% from a year earlier to $2.2 billion.
Many analysts have said that Tesla's ambitions to develop full self-driving (FSD) for its EVs could usher in a new phase for the company. Ark Invest leader Cathie Wood thinks the successful development of FSD could increase Tesla's stock price fivefold or more. Growth-oriented investors would be wise to consider adding shares of the most successful EV stock.
2. Amazon
Next up is Amazon, one of the best growth stocks around. This tech juggernaut straddles multiple segments, including cloud services, e-commerce, and digital advertising.
After enduring a post-pandemic hangover, Amazon boss Andy Jassy embarked on a cost-cutting initiative that is paying off. In its most recent quarter (ending on June 30), the company reported net income of $6.8 billion. That was the highest figure since the end of 2021. Moreover, despite the cutbacks in staff and capital investments, revenue growth rose to about 11%.
The company's crown jewel remains its cloud services business, Amazon Web Services (AWS), but its advertising segment is one that investors should keep an eye on. Revenue for that segment jumped 22% year over year to $10.7 billion, as Amazon continues to close the gap with advertising competitors Alphabet (parent company of Google and YouTube) and Meta Platforms (parent of Facebook and Instagram).
Lastly, Amazon's valuation should give growth investors a reason to smile. Shares trade at a price-to-sales (P/S) ratio of 2.4, significantly below the company's five-year average P/S ratio of 3.5. Amazon shares remain historically affordable, meaning investors can still accumulate shares of one of the country's great companies at an attractive price.
