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2 Top Growth Stocks to Buy Right Now

By Will Ebiefung - Updated Jul 2, 2021 at 4:04PM

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Amazon.com and CuriosityStream look poised for explosive long-term growth.

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 -1.24%) and CuriosityStream (CURI 1.59%) 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. It can deliver continued long-term expansion because of strength in its Amazon Prime subscription service and pivots to new markets like healthcare.

Upward arrow on fire.

Image source: Getty Images.

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 toward product discounts and faster shipping), but video can 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 of annual sales, making it a massive opportunity for Amazon to disrupt. 

First-quarter revenue grew 44%, 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 price-to-earnings multiple of 48 times forward estimates. 

2. CuriosityStream 

Founded in 2015 and going public in February 2021, CuriosityStream is one of the latest start-ups attempting to crack the $50.11 billion video streaming industry. The company's unique market niche, rapid top-line 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, CuriosityStream 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 CuriosityStream's moat and expand its content library. 

First-quarter revenue jumped 33% to $9.9 million. 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 10 times expected revenue, which looks reasonable considering its rapid growth rate. 

Despite the strong guidance, CuriosityStream has been under pressure after Bank of America downgraded the stock to "underperform" after it surpassed the bank's price target at $14 per share (shares have since recovered). The analysts didn't provide any new negative information to justify their downgrade. Anyhow, investors should focus on the long term instead of getting distracted by short-term price fluctuations. 

Betting on growth 

Amazon and CuriosityStream both offer outstanding growth in the e-commerce and video streaming industries. Amazon is better for investors who want to bet on a proven business because of its track record of success. CuriosityStream faces more uncertainty, but it offers the potential for multi-bagger returns as its operations expand. 

 

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Will Ebiefung owns shares of CuriosityStream Inc. The Motley Fool owns shares of and recommends Amazon, CuriosityStream Inc., Netflix, and Walt Disney. The Motley Fool recommends the following options: long January 2022 $1,920 calls on Amazon and short January 2022 $1,940 calls on Amazon. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Amazon.com, Inc. Stock Quote
Amazon.com, Inc.
AMZN
$140.80 (-1.24%) $-1.77
Wal-Mart Stores, Inc. Stock Quote
Wal-Mart Stores, Inc.
WMT
$126.58 (0.80%) $1.01
CuriosityStream Inc. Stock Quote
CuriosityStream Inc.
CURI
$1.92 (1.59%) $0.03

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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