Warren Buffett gets a lot of attention due to his remarkable track record running Berkshire Hathaway over the past several decades. There is no shortage of investors who try to emulate his style of value investing, a strategy that has worked extremely well.
However, that's not the only way investors can allocate capital. Buying companies that are growing revenues and/or earnings quickly can also work out very well. What's more, many people might find this philosophy to be more interesting.
With that being said, here's the ultimate growth stock to buy with $1,000 right now.
Online shopping is still important
If investors are looking to add more growth potential to their portfolios, it's worth considering making an investment in Amazon (AMZN 0.23%). While the company isn't expanding quite as rapidly as it was in the early days (net sales skyrocketed an astonishing 841% in 1997), this is a top choice due to the durability of its growth. Yes, there are smaller companies in various industries that might be more exciting, but they certainly aren't as proven as Amazon.
Amazon still gives investors plenty of reasons to be optimistic. The business has its hands in multiple industries that have tremendous growth potential over the long term.
The Amazon empire began as an online marketplace that only sold books. Today, it sells virtually everything under the Sun. Shoppers can even buy cars on the website. Perhaps amazon.com, which had a whopping 2.7 billion visitors in August, could become a major player in residential real estate in the future.
In the U.S., less than 20% of the retail sector is represented by online shopping, which provides a big runway for growth. As the leader in the industry, Amazon will benefit.
Exciting areas for investors to focus on
The most exciting area for investors, though, has to be the cloud-computing segment, Amazon Web Services (AWS). This has been a key growth driver in the past decade, a trend that continues to be true. Revenue was up 17% in the second quarter (ended June 30). Given that CEO Andy Jassy estimates that more than 85% of all IT spending still hasn't migrated to the cloud, there is a big opportunity as the transition continues.
There is competition in the space, most notably from Microsoft Azure and Alphabet's Google Cloud. The pie will be big enough for many winners, as Grand View Research estimates the industry will be worth $2.4 trillion by the end of this decade. And with businesses in every industry looking to leverage artificial intelligence (AI), cloud-computing platforms that provide necessary capabilities like AWS will become mission-critical partners.
Investors should also pay attention to digital advertising, a thriving segment that collected $15.7 billion in revenue during Q2, a 22% year-over-year increase. Amazon has valuable digital real estate, both on its online marketplace and on Prime Video, that it is monetizing. Only Alphabet and Meta Platforms have larger digital ad efforts.
Those two internet giants register wide operating margins. While Amazon doesn't report how profitable its digital advertising segment is, investors can safely assume it's an extremely lucrative division.
Buying a dominant company
Buying good growth companies can result in wonderful returns for long-term investors. I believe this will be true of Amazon over the next five years.
As mentioned, the company is clearly well positioned to benefit from multiple secular trends, which will provide a lift to revenue. And this should support higher earnings over time, particularly as more sales come from higher-margin segments.
Amazon has a fantastic history of success. There is no reason to believe this will change, as it remains a dominant business. It's the ultimate growth stock to buy with $1,000 right now.
