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2 Top Stocks to Buy in January

One of the best things about bear markets is that they often give investors the opportunity to pick up shares in great companies at prices that would otherwise not be available. Thanks to the market's December swoon, we have such an opportunity today.

Two of the most dominant businesses in the public markets are now trading for about 20% less than they were just a few weeks ago. Read on to learn more about them -- and how you can use this situation to your advantage.

Bear markets bring about buying opportunities for the bulls. Image source: Getty Images.

The e-commerce juggernaut

Few businesses give investors more ways to win than Amazon.com (NASDAQ: AMZN).

The tech titan dominates online retail in the U.S. and, increasingly, many other areas of the world. Yet despite years of torrid growth, e-commerce still represents only about 10% of total retail sales in the U.S. Moreover, billions of people around the globe have yet to even gain access to the internet. In turn, Amazon's online retail operations have long runways for growth still ahead.

Incredibly, the company has built another business that could have even more long-term profit potential than its e-commerce platform: Amazon Web Services. AWS is the leading cloud computing infrastructure platform in the world, with an approximately 50% share of this rapidly growing market. With the overall cloud services market projected to exceed $278 billion by 2021, according to IT research company Gartner, AWS should continue to fuel Amazon's growth for many years to come.

The success of its e-commerce and cloud businesses has allowed Amazon to expand into other high-growth markets. It's built a booming advertising business and a leading position in the quickly expanding smart-device market. Additionally, the company's acquisition of Whole Foods has made it a force to be reckoned with in the $640 billion U.S. grocery industry.

Better still, the recent market decline has taken Amazon's shares down along with it. Now off about 20% from its 52-week high, Amazon's stock is currently trading for around 60 times Wall Street's earnings estimates for 2019. Though seemingly expensive at first blush, that's a quite reasonable price to pay for an elite business that's forecast to grow its profits at more than 42% annually during the next half-decade. Investors may want to use the stock's recent sell-off as an opportunity to acquire an ownership stake in this amazing long-term growth story.

The search king

We live in the age of information -- and Google is where much of the world goes to find the knowledge they seek. But new investors might need to do an internet search of their own to figure out how to invest in Google, because the tech giant reorganized its corporate structure in 2015 to better reflect its broad collection of businesses, adopting the name Alphabet (NASDAQ: GOOGL) (NASDAQ: GOOG) for the parent company that owns Google as well as other corporate entities.

Each query conducted on Google's ubiquitous websites and mobile apps feeds more data into its powerful search engine. This data helps Google better target its ads, which makes them more relevant to users and valuable to marketers. As Google collects more data, it generates more cash, which it can then use to improve its services, which go on to collect more data, and so on. It's a virtuous cycle that has helped the company build one of the most powerful economic moats ever created.

Yet Google's ecosystem extends well beyond search. More than 2 billion people use its Android mobile operating system, making it the most dominant mobile platform by far. Nearly 2 billion users watch over 1 billion hours of videos on YouTube every day. In addition, Gmail, Google Maps, Google Play Store, Chrome, and Google Drive all serve more than 1 billion users each.

The tech titan is also investing aggressively in areas such as self-driving vehicles, healthcare, cloud computing, and cybersecurity. The incredible profitability of Alphabet's search business allows it to reinvest some of its bountiful cash flow into "moonshots" -- risky but potentially high-reward endeavors that can disrupt massive industries and even create entirely new ones. In this way, an investment in Alphabet comes with the additional upside of a venture capital-like tech fund -- one that's managed by some of the best minds in the industry with a proven track record of value-creation.

Better still, Alphabet's stock is currently almost 20% off from its highs of the past year. Shares can now be had for about 22 times analysts' forward earnings estimates for 2019 -- a fair price to pay for a dominant business that's projected to grow its earnings by more than 15% annually over the five years. As such, investors may want to consider buying some of the search king's sock today.

10 stocks we like better than Alphabet (A shares)
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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. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), and Amazon. The Motley Fool recommends Gartner. The Motley Fool has a disclosure policy.

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