3 Stocks That Could Put Amazon's Future Returns to Shame

Few stocks have delivered better performance over the last two decades than Amazon. And with the internet giant's cloud segment thriving, lots of room for growth in e-commerce, and the company constantly evaluating and pursuing new opportunities to expand its global reach, Jeff Bezos' business still has plenty of promise ahead.

That said, there are stocks on the market today that will go on to post even better returns. We asked three top Motley Fool investors to spotlight companies they think have the potential to trounce Amazon's future stock performance. Read on to see why they believe Vertex Pharmaceuticals (NASDAQ: VRTX), Proofpoint (NASDAQ: PFPT), and Baozun (NASDAQ: BZUN) have what it takes to be big winners.

A biotech with a monopoly in its niche

Keith Speights (Vertex Pharmaceuticals): As huge as Amazon is, it doesn't have anything close to a monopoly in any of its businesses. Customers can go elsewhere for any type of product or service sold by the internet giant. Contrast that with a company that's less than one-tenth its size that not only has a monopoly in its niche market for now, but is also poised to grow much faster: Vertex Pharmaceuticals.

Until recently, there were only two FDA-approved cystic fibrosis (CF) treatments -- Kalydeco (ivacaftor) and Orkambi (a lumacaftor/ivacaftor combo) -- and both belonged to Vertex. That count just increased to three, and the third is also owned by Vertex. The FDA announced its approval for Symdeko, a combination of tezecaftor and ivacaftor, on Monday.

Right now, around 34,000 CF patients have the gene mutations that make them responsive to Kalydeco and Orkambi. With approval of the tez/iva combo in the U.S. and Europe, and label expansions for Orkambi, Vertex should be able to increase its addressable market to 44,000. Ultimately, though, the biotech plans to be able to treat all 75,000 CF patients worldwide through triple-drug combos in development and the use of gene-editing therapies.

A few other companies have CF candidates in their pipelines, but Vertex has a big head start over all of its rivals. The biotech is also expanding its focus into other rare diseases. I pointed to Vertex as one of the best biotech stocks to buy in January, and continue to think this fast-growing company is a great pick for investors.

A high-growth cybersecurity play

Leo Sun (Proofpoint): Proofpoint provides a cloud-based security platform that blocks threats in emails, mobile apps, and social media accounts. It serves more than half of the Fortune 100, as well as 14 of the top 15 research universities in the world. Its services scan over 600 million emails, more than 7 million mobile apps, and hundreds of thousands of social media accounts daily.

Proofpoint's market will continue expanding as the usage of emails, apps, and social media accounts rises. That's why its revenue rose 37% to $515.3 million last quarter, and analysts anticipate another 30% growth in 2018. Deferred revenue, a key indicator of future growth, jumped 47% to $381.9 million in 2017.

Those figures were boosted by its acquisitions of Cloudmark (messaging security) Weblife (web browsing security) in late 2017. On the bottom line, Proofpoint's non-GAAP net income surged 149% to $42.1 million. Analysts expect that figure to rise another 39% this year. CEO Gary Steele attributed his company's strength in 2017 to its "robust add-on and renewal activity," along with an "increased penetration of the Fortune 1000".

Proofpoint's stock has rallied more than 600% over the past five years, and it isn't cheap at more than 90 times forward earnings. However, the cybersecurity market today bears similarities to the e-commerce market Amazon occupied in the late 1990s -- it's growing, but highly fragmented. Therefore, I believe that Proofpoint, with a market cap of just over $4 billion, could emerge as a major market leader over the next few years.

A Chinese multimedia giant

Keith Noonan (Baozun): Like Amazon, Baozun stands to benefit from having a highly scalable business model that operates at the intersection of a variety of favorable industry and economic trends. The company's core business is providing an online retail platform for its partner brands, and it looks poised to benefit as rapid economic development expands China's middle class and paves the way for more growth in that country's red-hot e-commerce space.

McKinsey & Company estimates that average household discretionary spending in the China's urban areas will have increased from $4,000 in 2010 to $8,000 in 2020, a trend that bodes well for consumer brands. The number of people living in those urban areas is expected to continue growing as well. Roughly 56% of the country's population lived in cities as of April 2017, and its government expects this figure to reach 60% in 2020. These developments will only add to the momentum behind online retail.

Last quarter, the total sales volume on the company's platform increased roughly 71% year over year, and its number of brand partners grew from 127 to 146. Those are encouraging statistics, but they also leave a long runway for sales growth, and profitability is on track to improve as the company shifts away from physical order distribution in favor of simply connecting vendors with consumers. Baozun also has a partnership with Alibaba, China's largest e-commerce platform -- a dynamic that allows it to tap into the larger company's customer base and insulates it somewhat against competitive threats.

Trading at roughly 32 times forward earnings estimates, Boazun stands out as an appealing growth stock. Its roughly $2 billion market cap means it will have an easier time delivering explosive capital appreciation than Amazon, and a confluence of macroeconomic and industry-specific growth catalysts suggest that the stock has a promising chance of making good on that potential.

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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Keith Noonan has no position in any of the stocks mentioned. Keith Speights has no position in any of the stocks mentioned. Leo Sun owns shares of Amazon. The Motley Fool owns shares of and recommends Amazon. The Motley Fool recommends Vertex Pharmaceuticals. The Motley Fool has a disclosure policy.