Considering Ditching Amazon? Unwavering Shares Proven to Be Superior Options.
Nobody oughta disregard Amazon in the investment sphere, it's practically impossible not to. Amazon stands out with exceptional future prospects in e-commerce, artificial intelligence (AI), and more. Amazon's stock has surged by 31% this year, making it a prominent figure in two major world industries right now. Sixty-three out of sixty-seven analysts recommend buying Amazon stock, with the remaining four advising a hold.
However, the significant returns investors have previously reaped may not occur again. With Amazon already being a giant company, even with its vast potential, expansion is expected to be a more gradual process compared to its early days.
Investors seeking exponential growth might find it more feasible in newer stocks boasting colossal growth prospects. If you're seeking a suitable investment option, let me suggest two contenders - e.l.f. Beauty (ELF -0.04%) and Revolve Group (RVLV -0.69%).
1. Rising High in Cosmetics
The cosmetics world has long been controlled by a select few heavyweights. However, the digital age is disrupting this status quo. Leading brands like Estée Lauder and L'Oréal have been expanding through acquisitions, strengthening their grip on the market. Meanwhile, Revlon, along with a few others, has remained influential in the mass beauty segment, also by acquiring competitors. They have created formidable competition and hindrances to fresh entrants.
e.l.f. has transcended convention by focusing on digital and social media platforms and devising an omnichannel strategy that resonates with its young target audience. Despite its smaller scale in comparison to its peers, it's expanding at an astounding pace, outperforming almost every other cosmetics brand today. It's seized market share and climbed from the No. 5 position to the No. 2 position in the mass cosmetic brand dollar share between 2022 and the most recent quarter. Its skincare segment has recorded a 45% increase while the overall industry is edging up by 1.2%.
Amazon revenue growth
e.l.f.'s tenacity is evident even in challenging economic conditions. Sales soared by 50% in the 2025 fiscal first quarter (ended June 30), with gross margin growing by 0.8 percentage points to 71%. Operating income and earnings per share (EPS) dipped, yet both remained favorable, and management boosted its revenue, operating income, and EPS forecast for the entire year.
11%
Now let's compare Amazon's and e.l.f.'s sales growth over the last four quarters:
10%
| Metric | Q3 24 | Q2 24 | Q1 24 | Q4 23 || --- | --- | --- | --- | --- || Amazon revenue growth | 11% | 10% | 13% | 14% || e.l.f. revenue growth | 50% | 77% | 85% | 76% |
13%
e.l.f.'s lower earnings can be partially attributed to its acquisition of the skincare brand, Naturium, which immediately amplified its sales — it contributed to 16 percentage points of the first-quarter increase. This temporary setback is anticipated to lead to enhanced earnings for the full year.
14%
e.l.f.'s performance surpassed Amazon's in terms of earnings growth over the past three years.
e.l.f.'s remarkable growth rate may be higher than Amazon's, but its stock trades at a forward one-year P/E ratio of 25, lower than Amazon's 33. With e.l.f. in the throes of an expansion phase, and ample market share to conquer, e.l.f. stock could prove a fantastic addition to a growth-focused portfolio.
E.l.f. revenue growth
2. Soaring in Fashion
50%
Just as e.l.f. utilized its digital, social media-driven platform to become an influential force in beauty, Revolve has used AI technology to emerge as a promising competitor in fashion. Its extensive social media presence and partnerships with celebrities enable it to maintain a strong foothold. Also, its all-digital business facilitates profitability.
77%
Like many retailers, it has grappled with inflation. However, the positive trends just might be starting to materialize.
85%
Sales grew by 3% year-over-year in the second quarter - the first increase since 2022. Net income also doubled compared to the preceding year. As usual, the customer figures present the real picture. Revolve continues to attract new customers despite the challenging environment, showing a 5% increase year-over-year. Meanwhile, the average order value edged up 2%.
76%
These favorable trends can largely be attributed to a reduction in the return rate, which is a hopeful sign for the future. Management has taken strategic steps to lower the return rate while improving the shopping experience, including improving size guidance and personalizing merchandise to minimize returns. Additionally, it has developed an internal search function that boosts sales while keeping costs minimal.
Revolve's sales are still significantly lower than those of apparel giants like Gap and Nike, leaving it ample scope for growth. As inflation subsides and interest rates decline, it's likely to experience notable advancements. It could also thrive closer to the cherished holiday season.
Due to the tough climate Revolve is currently facing in its business operations, you'd nearly need to travel back in time to the pre-inflation era to acknowledge how it managed to surpass Amazon during more favorable circumstances.
Given the situation, it's only feasible to consider this hypothetical scenario, and as income begins to rebound, it's becoming increasingly clear that it has what it takes to succeed.
Revolve's stock is currently trading at a forward, one-year price-earnings ratio of 36, which is marginally higher than Amazon's. However, if you can visualize the prospective growth ahead, it may make sense why it commands such a premium.
In the realm of finance and investing, some analysts might advise exploring alternative investment options due to the anticipation of Amazon's growth becoming more gradual. For instance, investors seeking exponential growth may find it more feasible in newer stocks like e.l.f. Beauty. Despite being a smaller company in comparison, e.l.f. has demonstrated impressive expansion, with its skincare segment recording a 45% increase while the overall industry is edging up by 1.2%.
In the world of fashion, Revolve Group has leveraged AI technology and a strong social media presence to emerge as a promising competitor. Its net income doubled in the second quarter compared to the preceding year, and it continues to attract new customers. Despite its current trading P/E ratio being marginally higher than Amazon's, some investors may see value in Revolve's potential for future growth.
