5 Stocks To Buy If You Already Own Amazon
Written by
Marc Guberti
Edited by
Jenna Klaverweiden
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Amazon (AMZN) investors have had a lot to be happy about over the years. The tech giant has more than doubled over the past five years while outpacing the Nasdaq-100 this year.
However, investors shouldn’t put all of their eggs in one basket. Diversifying into other stocks, including some that are similar to Amazon, could yield higher returns and mitigate risk.
Here are some of the top stocks to buy if you already own Amazon, according to experts.
Also see how much you’d have now if you invested in Amazon stock ahead of the 2023 holiday season.
Costco (COST)
Craig Sarembock, a wealth advisor and principal at Bartlett Wealth Management, recommended Costco stock for Amazon investors.
“[Costco] provides significant value to customers in many different areas. Treasure hunt feel. Tremendous amount of white space to add stores internationally. Recent membership price hike and crack-down on card sharing (a la Netflix) will likely lead to a big jump in membership going forward,” he said. “Long-term compounder with large dividend increases over time. They do well when the economy is strong, and they do well when the economy is struggling. A great mix of growth and defensiveness.”
Costco’s stock is about even with Amazon’s for the year. The wholesaler has more than tripled in value over the past five years, outpacing Amazon over that time period.
Nvidia (NVDA)
David Materazzi, CEO of Galileo FX, also recommended Costco. However, his two other picks cater to investors who value Amazon’s tech components, like cloud computing and artificial intelligence (AI). Materazzi suggested Nvidia as an investment opportunity to consider.
“Nvidia dominates in AI and data centers. Its chips power systems for gaming, business and research. Growth in these areas drives demand,” he said.
The AI chipmaker’s stock has rallied by more than 2,000% over the past five years while almost tripling this year.
Salesforce (CRM)
Materazzi also suggested Salesforce as a compelling opportunity for long-term investors. The customer relationship management (CRM) software especially appeals to Amazon investors who like Amazon Web Services’ contributions to the tech giant’s financials.
“Salesforce is strong in cloud software and business tools. [The company] helps businesses manage sales and customers. Its cloud tools are essential as more companies go digital,” Materazzi said.
Salesforce’s stock has seen a return of almost 40% this year. Shares have more than doubled over the past five years, but Amazon has outperformed it during that stretch. Additionally, its revenue and profit margins have been growing.
TJX Companies (TJX)
Sarembock also recommended TJX Companies, which is a defensive stock that can still do well in a strong economy.
“[TJX Companies] operates very successfully by stocking limited quantities of items, forcing loyal customers to shop regularly. Best merchandiser in the business with significantly more inventory turns than competition. [TJX Companies] offers significant value at Marshalls, T.J. Maxx, Home Goods and now Sierra Trading,” he said. “Like [Costco], they do well when the economy is strong, and they do well when the economy is struggling. A great mix of growth and defensiveness. People like good value all the time.”
Shares are up by about 35% for the year and have more than doubled over the past five years. While Amazon has slightly outperformed it on both measures, TJX Companies has a lower price-to-earnings ratio and a dividend yield above 1%.
McCormick (MKC)
McCormick is Sarembock’s final stock recommendation for Amazon investors who want to diversify their portfolios.
“They are the King and Queen of spices and have also entered the mustard and hot sauce markets. Control a very large portion of the retail and industrial trades and have seen an acceleration recently, particularly in their food service lines. Stock is trading under historical valuation averages and is seeing a turnaround extending into 2025,” he said.
McCormick has lagged behind Amazon stock, though. It’s up by 17% for the year and has dropped by nearly 3% over the past five years. The stock compensates by having a reasonable valuation and a dividend yield above 2%. McCormick is more suitable as a defensive income stock, but a turnaround that extends into 2025 may result in respectable gains for patient investors.
Editor’s note: All stock gains are as of Dec. 12, 2024.
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