There's no denying Amazon.com (AMZN 1.97%) has delivered incredible gains for many investors in recent years. Shares of the e-commerce giant have skyrocketed 1,080% over the past decade as of this writing, including a more than 30% gain in the last year alone.
Of course, it becomes more difficult to sustain those rates of return as Amazon grows from its increasingly larger base. But that also raises a question: Are there any stocks that could possibly soar even higher for investors looking to put money to work today?
We asked three top Motley Fool investors that very question. Read on to learn why they think iRobot (IRBT +0.00%), Wayfair (W 7.41%), and Control4 (CTRL +0.00%) fit the bill.
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Welcome your future robotic helpers
Steve Symington (iRobot): iRobot Corporation is on a tear with shares up nearly 120% over the past year as of this writing, helped by a long streak of successive quarterly earnings beats. So the home robotics specialist has already outpaced Amazon over the same period. For perspective, in its most recent quarter iRobot saw revenue climb a solid 23.1% year over year to $183.1 million, helped by more than 46% growth in U.S. consumer revenue. And earnings per share rose nearly 59% over the same period, to $0.27.
But lucky for long-term investors, iRobot stock dropped almost 16% on Wednesday after short-selling firm Spruce Point Capital expressed concerns over the recent launch of a competitive value-priced robotic vacuum from Shark. As I noted during the plunge, however, iRobot has long considered new market entrants -- especially if they were previously focused on the upright market -- a positive sign of validation for the budding robotic vacuum cleaner space. Keeping in mind iRobot CEO Colin Angle expressed confidence earlier this year that their core market is an an inflection point in its growth, I think there is plenty of room for multiple market leaders to thrive going forward.
What's more, iRobot is enjoying solid supplementary growth from its newer Braava and Braava jet floor mopping models, especially in Asia where hardwood floors are prominent. And down the road, investors can look forward to more outdoor products from iRobot including a robotic lawn mower. Couple these new offerings with iRobot's increasing focus on utilizing the cloud to help make their robots even smarter, and it's evident that iRobot enjoys a world of possibilities as it works to expand its scope. For investors who take advantage of the recent dip in its share price, I think iRobot stock is a compelling buy that could continue to trounce Amazon's returns over the long run.
People will buy furniture online, too
Demitri Kalogeropoulos (Wayfair): Wayfair's stock has doubled so far this year, but I see room for more impressive gains ahead. Like Amazon -- particularly in its early days -- this e-commerce specialist is prioritizing market share growth today.
The strategy is paying off handsomely. The company's pool of active customers just passed 9.5 million, up 43% over the prior year. This allowed revenue to expand by 43%. Other key metrics point to healthy engagement by Wayfair's army of online shoppers. Repeat business accounted for 61% of order volume, up from 58% a year ago.
Wayfair is aiming to build on that solid momentum by expanding its network to make bulk items less costly to deliver. That should help management take advantage of what they see as a long runway for growth in the home furnishings niche, given that only about 9% of consumers today shop for home goods online compared to 20% for apparel and 35% for consumer electronics.
If Wayfair can use its brand strength and market position to capture a significant portion of that industry growth, investors stand to be rewarded with strong profits. The company hasn't yet achieved positive net income. But it cut its net losses in half last quarter. And with gross profit margin ticking toward 25% of sales, management's aggressive long-term profitability target (adjusted earnings margin of between 8% and 10%) appears more likely as Wayfair's customer base approaches 10 million.
Buying the smart home trend
Daniel Miller (Control4): The Internet of Things in its simplest definition is just wireless communication embedded into everything around us -- be it vehicles, smartphones, buildings, or business operations -- and one lucrative emerging opportunity is found in smart homes that are increasingly becoming interconnected and requiring premium solutions. That bodes well for Control4 (CTRL +0.00%), a leading provider of automation and control solutions for the connected home through anything from integrated music, video, lighting, temperature, security, communications, among other products.
Since 2016, the stock has soared 273% compared to the S&P 500's respectable 23%, but there's reason to believe as more homes become interconnected that Control4 could make its current gains look modest. Its ability to achieve those gains depends on its ability to work with and develop new products and key in on its premium target consumer. Control4 is a premium solution for smart homes with some solutions for single rooms costing as little as $1,000 while whole house solutions could range anywhere from $20,000 to $250,000 -- yes, you read that second figure correctly. The good news is that management believes it has only penetrated less than 2% of the estimated 14.1 million U.S. households generating over $150,000 income, its target consumer.
Control4 investors also received a bit of optimism late last week when Cowen analyst Rob Stone upgraded the stock to outperform after the company made a handful of announcements at CEDIA Expo, a conference for custom electronics installers, including new products, enhancements, dealer tools, an intercom app, and new audio and wireless router products. Smart homes in general are just in the early stages of becoming a mainstream trend, and if Control4 can continue to capitalize on its premium consumer, the stock could be poised to reward patient, long-term investors.
