A business doesn't grow explosively by doing the same thing as everyone else. So if you want to invest in growth stocks -- companies that expand faster than rivals -- bet on companies with innovative expansion strategies like fuboTV (FUBO 8.72%) and Amazon.com (AMZN 2.83%). Let's dig deeper to find out why these stocks could boost your investment portfolio.
Many Americans are ditching cable subscriptions in favor of targeted streaming platforms, and fuboTV is an excellent way for investors to bet on this trend. The company is also exploring opportunities in sports betting -- giving it plenty of leverage to supercharge growth.
fuboTV's fourth-quarter revenue soared 98% year-over-year to $105 million because of a 73% increase in paid subscribers over the same period, which now stand at roughly 547,880. Management credits the strong performance to fuboTV's focus on sports, which draws higher viewer engagement, according to CEO David Gandler. fuboTV's strategy also has synergy with the sports betting market, and the company is making an aggressive pivot to this opportunity.
In January, fuboTV acquired sports betting start-up Vigtory, which it will use to launch a full-fledged sportsbook this year. The company has also secured market access in Indiana and New Jersey through an agreement with casino operator Caesars Entertainment.
Management is guiding for 2021 revenue of between $460 million to $470 million, which would be about 75% higher than 2020 sales. With a market cap of $3.3 billion, fuboTV stock trades at around seven times this projected figure. That's a high valuation -- especially considering fuboTV isn't profitable yet. But growth stocks often generate losses until their business models scale up, and fuboTV's breakneck growth and potential to expand into synergistic opportunities help justify its premium price tag.
With a jaw-dropping market cap of $1.5 trillion, you may think Amazon is done growing, but that is incorrect. Revenue and earnings are still expanding at a massive clip. And the e-commerce giant is expanding into new opportunities such as healthcare, which can help it maintain its momentum over the long term.
Amazon enjoyed a massive boost from the coronavirus pandemic, which increased at-home shopping throughout 2020. Net sales jumped 44% to $125.6 billion in the fourth quarter, with the company's AWS cloud computing segment representing 12% of revenue compared to 61% and 27% for North American and International e-commerce, respectively.
But while Amazon's core operations are performing well, it is a top growth stock because it doesn't rest on its laurels. Management is always looking for new growth opportunities that synergize well with its massive scale and logistics infrastructure.
In November 2020, Amazon made a big push into the $319 billion pharmacy market by allowing customers to fill their prescriptions through Amazon pharmacy in 45 states. The online pharmacy market is competitive, but Amazon has an advantage because the new platform synergizes with its Amazon Prime service, which gives members free two-day delivery along with savings of up to 80% at checkout.
It's all about synergies.
fuboTV and Amazon are top growth stocks because they aren't content with just one revenue stream. Both companies are exploring new opportunities -- like sports betting and online pharmaceuticals -- that synergize well with their core operations and could help them generate market-beating momentum over the long term.