Buy low and sell high is more than a maxim. It's an approach to investing that everyone should take.
Of course, that's easy to say, but difficult to accomplish. Taking a long-term view, you'd like to pick stocks with strong underlying fundamentals that trade at attractive valuations.
This value investing style means you have to be willing to think outside the box, but it can pay off handsomely. These two stocks qualify since the market appears to be discounting their long-term earnings potential. Fortunately, you don't need to start with an exorbitant amount to invest.
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1. Amazon
When analyzing Amazon's (AMZN +0.63%) growth opportunity, it's important to examine the company's cloud-computing division, Amazon Web Services (AWS). That's because the unit produced about 57% of 2025's operating income.
AWS' sales and profits have been growing at a nice clip. Fourth-quarter sales grew 23.6% year over year to $35.6 billion, while operating income gained 17.2% to $12.5 billion.
Some investors have been concerned with the higher expenses and planned capital expenditures (capex). Management projects this year's capex will reach $200 billion, up from 2025's $131.8 billion. But Amazon, particularly the AWS business, has a unique opportunity, given its strong market position, with generative artificial intelligence becoming more prevalent among organizations.
AWS already has a position of strength, with the leading market share at 28% in Q4. Given the amount of resources required to build data centers, there aren't many major competitors. Microsoft's Azure and Alphabet's Google follow with 21% and 14% shares, respectively. All other companies have below a 5% market share.
Including the stock price's recent dip following the company's Q4 earnings release, the shares have gained 7% over the last year through March 6. In comparison, the S&P 500 index returned 18.3%.
NASDAQ: AMZN
Key Data Points
As a result of this price action, Amazon's shares trade at a better valuation. The price-to-earnings (P/E) ratio has contracted from 36 to 30 over the last year. The stock has a median P/E multiple of 56 over the last five years.
Amazon's stock trades in line with the S&P 500's P/E ratio of 29. However, given the company's bright long-term growth prospects, the shares should trade at a premium.
2. Target
Target (TGT +1.63%) has gotten away from its core merchandising strategy, which is to offer differentiated goods that drive customer traffic to its stores and website.
Michael Fiddelke, recently promoted to CEO, aims to get Target back to its roots and win back customers to stem the sales decline. His priorities include differentiating the merchandising offerings, improving the online and in-store guest experience, and investing in technology. Rather than competing on price with the likes of Walmart, returning Target's offerings to what made it so popular makes sense to me. He's made management changes to foster his initiatives.
Last year's same-store sales (comps) dropped 2.6%, including a 2.5% decline in Q4. This covered the period that ended on Jan. 31.
However, Fiddelke has a more optimistic view about this year. He expects comps to increase slightly and operating margin to expand from 4.6% to 4.8%. Investors would welcome this after several years of sluggish comps.
Target's shares have rallied this year, including following the recent earnings release. Nonetheless, the stock produced a tepid 5% gain over the last year.
NYSE: TGT
Key Data Points
The valuation isn't as attractive as it was throughout 2025, but it's still very compelling. Target's stock has a P/E ratio of 15, up from 13 a year ago. Still, that's about half the multiple of the S&P 500. It's also lower than the five-year median P/E ratio of 17.
