The world is going digital, and the companies that maintain high growth rates tend to be part of that transformation. Let's explore the reasons why e-commerce giant Amazon (AMZN -0.68%) and freelancing platform Fiverr (FVRR -2.24%) have what it takes to turbocharge your portfolio


With a market cap of $1.8 trillion, Amazon has been growing for a long time. But the ride is far from over. While the company's core e-commerce and cloud computing operations have decelerated from pandemic highs, it still enjoys a massive opportunity in digital advertising, which can help support growth for decades to come.

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Second-quarter net sales jumped 27% year over year to $113 billion, while net income increased 48% to $7.8 billion. Those are solid numbers for any company, especially one already as large as Amazon. But they represent a significant deceleration from 2020 when second-quarter sales rose 40% against the prior-year period. The easing of the pandemic restrictions subdued online shopping activity and brought workers back to the office, softening demand for Amazon's AWS service.

That said, the slowdown isn't a big deal for long-term investors because Amazon has another ace up its sleeve. According to Loop Capital, its advertising segment is now 2.4 times bigger than that of SnapTwitterRoku, and Pinterest combined. And its userbase of 300 million active users, shopping data, and a captive audience of merchants gives it competitive moat rivals will struggle to replicate.

Amazon's "other" revenue segment (primarily advertising) surged 87% year over year to $7.9 billion in the second quarter. 

With a trailing price-to-earnings (P/E) multiple of just 60, Amazon stock looks like a fair deal -- just from its industry-leading e-commerce and cloud computing businesses, which are still growing very fast. But shares look like a bargain considering the company's potential to also dominate digital advertising. 

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Image source: Getty Images.

2. Fiverr

Do you want to get in early on a transformational megatrend? Look no further than Fiverr. Like Amazon, this freelance marketplace has slowed down as the pandemic's effects have faded. But the stock price dip is a buying opportunity because the company's long-term thesis (as an unbeatable way to bet on the gig economy) remains unchanged.

Fiverr shares are down around 20% since the company reported second-quarter earnings on Aug. 5. Revenue grew 60% year over year to $75.3 million, but management lowered its sales guidance to approximately $284 million (down from as much as $308 million) as consumers travel more and spend less time online. Fiverr's unique business model and massive business opportunity can still create value for investors, despite near-term challenges.

Management believes Fiverr has a total addressable market worth $115 billion of yearly sales as freelancing activity migrates online. The company can capture market share through its streamlined 'service as a product' business model in which freelancers generally advertise their skills instead of clients advertising jobs. Fiverr is also expanding through synergistic acquisitions like Working Not Working, a creative talent platform acquired in February.

With a market cap of $6.6 billion, Fiverr trades for around 23 times expected sales (at the upper bound of guidance), which is high. But the stock is worth a premium considering its rapid top-line expansion, massive addressable market, and potential for profit growth in the future.

You get what you pay for 

Growth stocks tend to trade for high multiples compared to their current revenue and earnings. That's because investors expect sales and profits to grow substantially over the long term. While Amazon and Fiverr boast relatively high valuations, Amazon looks like the safer bet because of its mature business and lower valuation of 60 times trailing earnings. With a P/S ratio of 23 and no profits yet, Fiverr will have to work much harder to justify its price tag -- but the payoff could be huge in the long run.