A market bounce is coming: 2 growth stocks to buy now and hold forever

The S&P500 had its worst first half since 1970, with soaring inflation dragging the general index into a bear market. The S&P 500 has since rebounded to some degree, but is still trading 11% below its high. This creates a buying opportunity for patient investors.

Of course, market timing is impossible, but investors don’t need a crystal ball to succeed. Every past downturn has ended in a new bull market, meaning a rebound is almost certainly on the way. Even better, historical data suggests that market downturns are the best time to invest.

Here are two growth stocks to buy now and hold forever.

1. Amazon: A leader in e-commerce and cloud computing

Amazon (AMZN 1.12%) has faced a number of headwinds over the past year, including rising fuel and labor costs and excess processing capacity. A deceleration in online shopping amplified the impact of these headwinds as the social effects of the pandemic faded and inflation soared. As a result, Amazon saw revenue rise just 10% to $485.9 billion over the past year, while earnings fell 61% to $1.12 per diluted share.

Those numbers left many investors feeling bearish, sending Amazon’s stock price plummeting – the stock is currently 23% off its all-time high. But I think these investors are missing the big picture. Amazon is a key player in e-commerce and cloud computing, and both sectors are expected to grow rapidly in the coming years.

According to Statista, Amazon accounts for nearly 38% of all e-commerce sales in the United States, more than the next 14 retailers combined. More importantly, the company is unlikely to lose its edge any time soon. Amazon is the epitome of convenience for merchants and consumers, thanks in large part to its extensive logistics network. Given this, management expects to reach its excess processing capacity in the second half of the year. According to eMarketer, e-commerce sales in the United States are expected to grow 12% annually to reach $1.7 trillion by 2026.

Additionally, Amazon Web Services (AWS) captured a 34% market share in cloud infrastructure services during the second quarter, compared to 31% in the same quarter last year. It’s more than Alphabetof Google Cloud and Microsoft Azure combined — the implications of this dominance are enormous.

Over the past year, AWS has achieved an operating margin of 31%. That’s several times higher than the rest of his company’s operating margin at best. In other words, Amazon’s profitability should accelerate as AWS becomes a bigger part of total revenue, and shareholders have good reason to believe that will happen. The cloud computing market is expected to grow nearly 16% annually to reach $1.6 trillion by 2030, according to Grand View Research.

With that in mind, stocks are currently trading at three times sales, a discount to the three-year average of 3.8 times sales. This is why this stock is a crying buy.

2. The New York Times: a proven media brand

Iconic Media Company The New York Times (NYT -0.84%) has successfully pivoted to a digital-first business model. Its Pulitzer Prize-winning journalists cover a wide range of topics: news, games, food, sports and product recommendations. The company also monetizes its print and digital content through subscription fees and advertising.

In the second trimester, The New York Times newspaper increased its subscriber base by 31% to 9.17 million, despite a 7% decline in print subscribers. Additionally, total subscriptions jumped 32% to 10.56 million as adoption of multiple products continued to rise, largely due to bundles. These trends have translated into strong financial results over the past year. Revenue climbed 15% to $2.2 billion and earnings rose 38% to $1.13 per diluted share.

Management expects three trends to be tailwinds for the business. First, the number of people with a college degree or higher in the United States is increasing. Second, survey data suggests that 21% of the US population is willing to pay for digital information, up from 9% in 2016. And third, younger generations prefer consuming information on digital devices.

The New York Times estimates it can reach 15 million subscribers by 2027, representing growth of about 15% on an annualized basis over the next 3.5 years. But the company currently has more than 135 million records — a metric that includes non-paying users with limited access to content — meaning its total addressable market is much larger.

Currently, the stock is trading at a reasonable price of 2.6 times sales, a discount to the three-year average of 3.7 times sales. That’s why this growth stock is a buy.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a board member of The Motley Fool. Suzanne Frey, an executive at Alphabet, is a board member of The Motley Fool. Trevor Jennewin holds positions at Amazon. The Motley Fool holds and recommends Alphabet (A shares), Alphabet (C shares), Amazon, Microsoft and The New York Times. The Motley Fool has a disclosure policy.

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