If you've been an investor for any length of time at all, you've almost certainly been encouraged to buy stock in Amazon. It doesn't just dominate the e-commerce arena, after all. It's also the world's biggest cloud computing service provider. This market leadership speaks volumes about the company's ability to execute.
There are other ownership-worthy stocks out there, though, including names that bring less risk and more immediate income to the table; most portfolios could use the diversification beyond the obvious growth companies anyway.
Against that backdrop, here's a closer look at three other equally unstoppable -- even if quite different -- stocks that may be even better buys at this time.
1. PepsiCo
When most investors are shopping around for a consumer goods holding, Coca-Cola (KO +0.77%) is a top-of-mind name. And understandably so. It's not just the leader of the packaged beverage industry. Its brands are woven into the fabric of our culture.
Just because a company is the biggest and best-known name in a business, however, doesn't inherently make it the best investment from that industry. Rival PepsiCo (PEP 0.46%) is arguably the better pick among the two titans of the beverage world.
On the surface, it's difficult to distinguish any major differences between the two businesses. Their products sit side by side on store shelves, and are priced about the same. Everyone has different taste and brand preferences, but they aren't radically different offerings.
There are distinct difference between the two beverage giants, though. Whereas the bulk of Coca-Cola's products are actually bottled and distributed by third parties that simply purchase concentrated flavor syrups from the company, PepsiCo handles all of its own bottling and distribution. It even does revenue-bearing bottling duties for other brands, further monetizing its assets.
Owning the production piece of the business adds to the company's net operating costs, dialing back PepsiCo's net profit margin rates compared to Coca-Cola's. But it does provide PepsiCo with the distinct advantage of complete control of every aspect of its operation, making it more flexible and nimbler.
This structure also allows PepsiCo to generate more net earnings growth that's passed along to shareholders in the form of dividends. In fact, boosted by more aggressive stock-repurchase programs, PepsiCo's dividend growth has easily outpaced that of Coca-Cola's over the course of the past couple of decades.
PEP Dividend data by YCharts
Although it's not shown in the chart, when reinvesting their respective dividends, PepsiCo's actually also been the more net-rewarding ticker of the two for the past 30 years. This dynamic isn't apt to change in the foreseeable future, either.
2. Shopify
You already know Amazon isn't just the leader of the Western Hemisphere's e-commerce industry, but downright dominates it. Market research outfit Digital Commerce 360 says Amazon currently controls a leading 40% of the United States online-shopping market, leaving next-nearest Walmart in the dust with only about one-tenth of this industry's annual sales. Amazon got there, of course, by ushering the business into the mainstream.
The e-commerce market is forever evolving, though, adapting to consumers' ever-changing preferences. And as it turns out, a massive online mall like Amazon's may now be too big for its own good, overwhelming rather than satisfying shoppers who crave something a bit more personal and authentic.
Enter Shopify (SHOP +3.32%).
Simply put, Shopify helps businesses of all sizes build and manage an e-commerce presence. The company no longer discloses how many merchants are now using its online shopping carts, payment processing tools, and inventory-management technology, but most estimates measures in the millions.
In the meantime, the company does still disclose other important metrics. For instance, per Tuesday's release of its fourth-quarter report, its clients' online shopping platforms collectively facilitated the sale of $95.5 billion worth of goods and services during the three-month stretch ending in December, in turn generating $2.8 billion in revenue for itself. Those two numbers are up 26% and 31% year over year, respectively, extending a long-established growth streak. Analysts are calling for top-line growth of more than 20% for at least the next couple of years, paired with similar per-share profit growth.
That's still just the beginning, though. As consumers and corporations alike continue to discover the value that Shopify's solutions bring to the table, look for the company to win more than its fair share of the e-commerce industry's future growth.
3. Broadcom
Finally, add technology outfit Broadcom (AVGO +2.02%) to your list of stocks other than Amazon to add to your portfolio.
Most investors have heard of the company, but many of these investors would struggle to name a single product Broadcom makes. That's because its tech is often found attached to the circuit board inside most consumer electronics; its name is rarely on a sticker on the outside of devices. That or its wares are found within data centers and communications platforms that consumers rely on without ever actually seeing.
Make no mistake, though: The world would look markedly different without Broadcom's solutions. See, Broadcom makes everything from hard drive control boards to Ethernet adapters to fiber-optic connectors to wireless antenna tech, and more.
Perhaps the biggest and most unexpected beneficiary of this company's know-how, however, has quietly been the artificial intelligence (AI) industry.
NASDAQ: AVGO
Key Data Points
Superfast computing processors made by Nvidia and its peers only solve part of the speed challenge created by the mountain of digital data now being produced and analyzed by AI data centers. The interconnections between all of these processors need to be just as fast.
Broadcom makes this superfast networking tech. Indeed, although AI revenue only made up $12.2 billion worth of last year's semiconductor revenue of just over $30 billion and total top line of $51.6 billion, the company's AI business grew a whopping 220% in 2024.
This still only scratches the surface of the opportunity, however. Mordor Intelligence believes the global AI hardware market is set to expand at an annualized pace of 26% through 2030, while Broadcom CEO Hock Tan himself commented in December that the artificial intelligence networking market could be worth anywhere between $60 billion and $90 billion per year by 2027. This tailwind of course offers enormous growth potential to a company that has few direct competitors.
