Facebook, Amazon.com (NASDAQ:AMZN), Apple (NASDAQ:AAPL), Netflix, and Alphabet's (NASDAQ:GOOGL)(NASDAQ:GOOG) Google, collectively coined the "FAANG" stocks, have generated astounding shareholder returns over a relatively short timeframe. Over the past five years, their shares have generated total returns of 187%, 533%, 210%, 631%, and 190%, respectively. If you'd invested $10,000 evenly among them five years ago, you'd be sitting on more than $45,000 today.

Finding a new grouping of stocks that could perform so well isn't easy, but there are some definite candidates for consideration. So which stocks could be the next "FAANG index"?

I think Spotify (NYSE:SPOT), Carvana (NYSE:CVNA), Amazon, and Zillow Group (NASDAQ:Z)(NASDAQ:ZG) -- a group that I'll call the SCAZ stocks -- are a good bet. Amazon is a repeat from the original FAANGs, but deservedly so, given the enormous markets it's working to excel in.

A stock chart showing the five year total return of the FAANG stocks

Image source: YCharts.

1. Spotify

Spotify is the world's largest audio streaming platform, with 248 million monthly active users (MAUs), including 113 million paying Premium subscribers, as of the end of September. Those user metrics grew 30% and 31%, respectively, last quarter. Despite this solid growth, the company still has a very small share of a 3 billion-plus smartphone addressable market to tap into, so the growth potential ahead is big.

While streaming label-controlled music isn't very profitable yet, the company's aggressive expansion into podcasting and its two-sided marketplace should contribute to rapidly growing profits. For example, the recently released Streaming Ad Insertion tool is bringing targeted and measurable advertising to podcasts for the first time, which should significantly increase ad pricing.

Skeptics point out competition from Apple Music, Amazon Music, YouTube, SiriusXM's Pandora, and others -- but Spotify is outperforming all of them.

For example, the No. 2 streamer, Apple Music, last reported a subscriber figure in June when it said it had over 60 million subscribers. Since then, Spotify's grown its MAUs and Premium subscribers by 38% and 36%, respectively. If Apple had impressive or even comparable numbers to report since then, it's unlikely the company would be keeping it a secret.

Spotify thinks its user engagement is twice that of Apple Music's and three times that of Amazon Music's. That's part of why Spotify believes its churn rate, which includes subscriber cancellations, is half that of Apple Music. Meanwhile, Pandora's user base continues to shrink. 

Some investors worry that the major music labels have such market power that they will capture most of the industry profit pool for themselves. But as Spotify continues to grow and diversify its business away from just music, and as the labels grow increasingly reliant on Spotify for their revenue, bargaining power in the industry should only shift in Spotify's direction.

2. Carvana

Carvana invented a better way for consumers to buy used cars and has been rewarded with astonishing growth.

Seven years after its founding, it's still growing revenue by over 100% each quarter. The company offers a selection of over 27,000 used cars for sale, entirely online, and delivers them to customers' doors or sends those customers to its gigantic patented vending machines to be picked up. Not only is it a better car buying experience, but management claims its cars are typically $1,000 cheaper than those its competitors sell.

Carvana's opportunity is vast because it has only about 0.5% of the estimated $800 billion-per-year U.S. used-car market. The market is extremely fragmented. with CarMax (NYSE:KMX), the used-car leader, having less than 2% market share nationally, and with the top 100 used car retailers having a combined 7% market share. 

Interestingly, Carvana's market share in its oldest market, Atlanta, was 1.94% at the end of 2018, and it's probably closer to 2.5% today. Since Carvana's market share in its oldest market is already higher than CarMax's share nationally, Carvana should become the used-car king if the rest of the country continues to follow Atlanta's lead.

At the same time, there's no clear upper limit for Carvana's market share, because its model has fewer constraints on growth than traditional used-car retailers, which have to build out hundreds of retail locations to grow. Carvana is rewriting the rules of the game in a huge market.

A young woman sitting in a car and smiling while being handed the keys.

Image source: Getty Images.

3. Amazon.com

Amazon is one of the original FAANG stocks, but it still has so much growth potential left that I have no choice but to include it in this group as well.

Despite Amazon's enormous success to date, it still controls just 1.2% of global retail sales. Similarly, Amazon Web Services (AWS) leads the Infrastructure-as-a-Service market and is already a $36 billion annual run-rate revenue business. Yet that's only 1% of the $3.7 trillion total information technology infrastructure market it's going after. Both businesses are only scratching the surface of their opportunity.

There's also a rapidly growing and high-margin online advertising business, as well as a slew of other emerging businesses. On top of that, Amazon relentlessly invents new businesses from scratch. We'll probably be talking about the company's huge global logistics business one day, or its dominant healthcare business, or some other big idea it's working on that we don't even know about yet. That pioneering culture of invention is a big reason Amazon is a repeat from the original group.

4. Zillow Group

Zillow Group is using its massive 196 million MAU base to completely reinvent the process of buying and selling homes.

By buying and selling homes directly through Zillow Offers, the company is positioning itself at the center of the home real estate transaction. That should open up large adjacent revenue opportunities, including mortgage origination, title insurance, homeowner insurance, design and renovation services, moving services, and a variety of other similar opportunities.

Over time, Zillow could evolve into a real-time marketplace of homes where buyers can purchase a house seamlessly with one click. If Zillow can create that marketplace, it should become enormously profitable. 

These companies find profit by finding a better way

Each of the FAANG stocks invented a new and/or better way of doing something, whether it was social media, e-commerce, smartphones, streaming video, or search. Similarly, the SCAZ stocks are pioneering better ways of streaming audio, selling used cars online, e-commerce/cloud/and everything else, and buying and selling residential real estate.

Just like the FAANGs, each of these businesses have (1) a tiny market share of an enormous market, and (2) competitive advantages necessary to successfully grow into those markets. Stock investors should take notice.