The major market indexes continue to surge to new highs, with the S&P 500 and Nasdaq Composite up 26% and 28%, respectively, year to date as of Nov. 11. Much of that growth is coming from a select number of highly profitable companies that dominate their respective markets. Investing in these unstoppable companies helps improve your odds of protecting and growing your savings.
If you are looking to improve your chances of investing successfully, here are two unstoppable stocks you might want to consider buying right now.
1. Amazon
Amazon(NASDAQ: AMZN) shares surged to new highs after reporting strong third-quarter earnings results. The company reported strong sales growth from its online retail stores and cloud services. The stock is not cheap, but it's reasonably valued considering the company's growing free cash flow.
Amazon is the leader in the U.S. e-commerce market and cloud services, and it is successfully converting its advantages in these businesses into improving profitability. Amazon's free cash flow rocketed to an impressive $70 billion on a trailing-12-month basis -- an increase of 253% over the last five years.
Importantly, the growth in free cash flow can help Amazon invest in artificial intelligence (AI) technology to support future growth. Amazon expects to spend $74 billion in capital expenditures this year, which is supporting AI services in the cloud business, in addition to rolling out same-day delivery for its online retail store.
The company also is investing to make its online store easier to browse. AI has powered product recommendations for years, but Amazon is starting to do a lot more, such as launching new features like AI Shopping Guides and Rufus, an AI-powered shopping assistant, to help customers find exactly what they are looking for. These investments are potentially widening Amazon's lead in e-commerce and could fuel strong growth over the long term.
With free cash flow soaring and the stock trading at a fair price-to-free cash flow ratio of 31, Amazon investors can still earn market-beating returns in the coming years.
2. Meta Platforms
Shares of Meta Platforms (formerly Facebook) (NASDAQ: META) are trading close to new highs after its third-quarter business update. Meta has over 3.2 billion people who use its social media apps every day, and that is driving strong demand in advertising. Like Amazon, Meta is generating tremendous amounts of growing free cash flow that is fueling investments in AI and strengthening its competitive advantage.
While revenue growth has slowed over the last few quarters, the Q3 report showed a strong 19% year-over-year increase. The company has spent significantly more on capital expenditures this year compared to 2023, but Meta still generated trailing-12-month free cash flow of $52 billion.
These expenditures are going to servers, data centers, and network infrastructure to support AI improvements and other business operations. Meta expects another significant increase in capital expenditures in 2025, which signals a long-term opportunity the company sees in expanding its AI capabilities.
AI is very important to Meta's business. It provides tools to help advertisers manage their ad campaigns, but it's also starting to show signs of boosting user engagement. "We're seeing AI have a positive impact on nearly all aspects of our work from our core business engagement and monetization to our long-term road maps for new services and computing platforms," CEO Mark Zuckerberg said on the Q3 earnings call.
Meta's free cash flow has more than doubled over the last five years, and it should continue to grow at double-digit rates. Wall Street analysts expect Amazon and Meta Platforms' earnings per share to grow at 21% annually in the coming years, which can be used as a proxy for free cash flow growth. Meta shares are reasonably valued relative to those estimates, with the shares trading at a price-to-free cash flow of 29.
Should you invest $1,000 in Amazon right now?
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. John Ballard has positions in Meta Platforms. The Motley Fool has positions in and recommends Amazon and Meta Platforms. The Motley Fool has a disclosure policy.
