A bull market isn't here yet, but we may be getting close. The S&P 500 has gained more than 20% from its bear market low, and that's one criterion needed to call a bull market. The other? The index must reach new highs. That hasn't happened yet, but investors are closely watching for it.
All of this means now is a great time to get in on high-growth stocks. They may be the first ones to take off as the economy improves and the market enters bull territory. Let's check out two players that could power the bull market's next record run.
1. Amazon
Amazon (AMZN 3.43%) has soared 57% so far this year, but there's plenty of room for this stock to gain over the long term. And the e-commerce and cloud computing giant could truly take off in the next bull market because it should benefit as consumers and cloud computing clients have more money to spend.
Positioning itself for strength, Amazon has made moves to adjust its cost structure. The company cut tens of thousands of jobs, prioritized investing in growth areas, and even revamped its fulfillment model. For example, in the U.S., Amazon switched to a regional fulfillment process from a national one and this will result in faster delivery times and lower costs. All of these efforts are helping Amazon during difficult times. And during better times, these moves should boost growth.
The company already has seen improvement in earnings. In the most recent quarter, operating income climbed and the company greatly reduced its outflow of cash. If Amazon is able to continue along this path, investors could expect a return to solid earnings growth and increases in return on invested capital down the road.
Today, Amazon shares are trading lower in relation to sales than their average over the past few years. Considering all this, and Amazon's leadership in the high-growth areas of e-commerce and cloud computing, there's reason to be optimistic about the company's future -- and ability to climb in a bull market.
AMZN PS Ratio data by YCharts
2. Lululemon Athletica
While many clothing brands struggled during parts of the pandemic, Lululemon Athletica (LULU 1.31%) kept on growing. The maker of yoga-inspired wear showed the strength of its brand by achieving all of the goals in its Power of Three growth plan. This involved increasing online sales, sales of its men's line, and international revenue.
Now, Lululemon is working on a second growth plan that it calls Power of Three x2. This five-year effort aims to double annual revenue to $12.5 billion by 2026. Lululemon says it will double online and men's line sales and quadruple international revenue.
There's reason to believe Lululemon will meet its goals. In the most recent quarter, net revenue, gross profit, and income from operations each advanced in the double digits. Diluted earnings per share also rose.
And Lululemon bought back shares in the quarter, a sign of confidence in the company's future. Another positive signal is that the company opened seven new stores in the first three months of the year.
Right now, Lululemon shares trade for about 32 times earnings estimates, down from more than 40 last year. This looks very cheap considering the company's earnings performance so far and its ability to reach its goals. Any progress toward the goals should lift the shares from today's level.
And, as people find themselves more optimistic about the market and the economy, this top consumer stock could benefit. With all of this in mind, Lululemon has everything it needs to lead the bull market's next record run.
