Growth Stocks: Amazon and Roblox Set for Long-Term Gains

Growth stocks are gaining traction, particularly Amazon and Roblox. Their strong operational improvements and expanding markets indicate a positive outlook for long-term investors.

Date: 21-02-2025

AI Rating: 7

Amazon Analysis: Amazon has a strong operating income of $11 billion in its cloud computing division, which is a significant contributor to its profit margins. Total operating profit for Amazon was $21 billion, showcasing a healthy profit margin overall. The company's core retail business also has the potential for increased profitability as management aims to reduce fulfillment costs.

With e-commerce continuing to grow, Amazon's strong international segment which recently turned a loss into a profit of $1.3 billion signals potential for further revenue increases. The ongoing improvements in operational efficiency are likely to bolster profit margins.

Regarding Roblox: The company's revenue grew impressively by 29%, reaching $3.6 billion in 2024. The growth in daily active users indicates a solid expansion potential in its user base. With a diverse revenue stream from user-generated content and initial successful advertising ventures, Roblox shows promise for long-term profit growth.

Both stocks are reasonably valued, with Amazon trading within its historical valuation range based on price-to-sales (P/S) and price-to-cash flow metrics. This suggests that investors can expect returns in line with the company's financial health. Roblox, trading at a P/S ratio of 12, is also within a favorable valuation zone.

Stocks: AMZN RBLX