S&P 500 The index includes approximately 500 major U.S. stocks and is often used as a key benchmark to measure broader stock market performance. In the last five years, the benchmark index has provided a total return of 109%. It has achieved a total return of 257% over the last decade.

Investing in an exchange-traded fund (ETF) It follows that the S&P 500 index is a great, low-risk investment move, but there are also stocks that are part of the index that will continue to produce returns that exceed the index’s average. With that in mind, read on to see why two Motley Fool contributors think buying these S&P 500 growth stocks and holding them for the next five years would be a great move.

This tech giant still has room to work

Keith Noonan: With a gain of approximately 22% this year, Amazon (AMZN 0.78%) The stock slightly underperformed the S&P 500 index’s 23% total return. But there are good reasons to think the tech giant will well outperform the benchmark index over the next half-decade.

For starters, Amazon’s business continues to look pretty strong. As of this writing, the stock has failed to surpass the S&P 500 in 2024 trading, but the business is showing encouraging results overall.

Amazon’s revenue rose 10% year over year to $148 billion in the second quarter, and its operating income more than doubled from the previous year to $14.7 billion. Revenue from the company’s Amazon Web Services (AWS) cloud infrastructure business reached $26.3 billion, up 19% from the previous year. Meanwhile, the company’s digital advertising business grew nearly 20% year over year to nearly $9.5 billion. While sales in the e-commerce-focused North American segment increased by 9% to $90 billion, sales in the international segment with a similar structure increased by 7% to $31.7 billion.

Growth in its high-margin AWS and digital advertising units, as well as margin improvements in e-commerce, have helped Amazon deliver strong profit growth this year. Its e-commerce business still provides the bulk of Amazon’s overall revenue, but there’s a good chance cloud services and digital advertising will continue to make up a larger portion of the overall sales picture. Increasing the sales contributions of these high-margin businesses will help the company’s overall margins rise even further.

But when it comes to assessing the return potential of Amazon stock over the next five years, it would be a mistake to underestimate its relatively slow-growing, low-margin e-commerce business. While the potential for artificial intelligence (AI) to be a sales driver for AWS has already been featured in many predictions, the potential for AI to have a transformative impact on the company’s online retail business still appears to be underappreciated.

As artificial intelligence and robotics pave the way for increased automation in the company’s warehouse and delivery operations, some of the untapped profit potential of the tech giant’s massive e-commerce imprint may soon begin to be unlocked. If these emerging technology trends begin to meaningfully reduce the operating costs of its online retail business, Amazon shares will be poised to soar.

This retail leader can continue to crush the market

Jennifer Saibil: Home Depot (HD -0.94%) It’s been a market-beating stock for almost forever. It has nearly doubled the return of the S&P 500 over the past 10 years, and the further back you go, the wider the gap becomes; It has grown at more than 3 times the earnings of the broader market over the past 15 years.

If you needed any proof of this company’s strength, it’s still outperforming the market over the past year despite major challenges. These challenges are external, and the market is aware of this as well as how well Home Depot is handling the situation.

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The property market is under serious pressure due to high mortgage rates and shoppers in general are staying away from big, expensive items due to inflation. Home Depot reports a small sales increase second quarter of fiscal year (ended July 28) was driven by a recent acquisition and new stores, but comparable sales were down 3.3%. The average ticket fell 2.2%, but big-ticket items (over $1,000) fell 5.8%, with big items like kitchen remodels having “smoother engagement.”

The tide may begin to change as interest rates begin to fall. Home Depot is the world’s largest home improvement chain, with more than 2,300 stores and strong digital channels. Despite the decline in comparable sales, it’s still incredibly profitable and delivering growth wherever it can. The omnichannel component has become a key part of the business, and digital sales increased 4% year-on-year in the second quarter; Half of the orders were collected in stores.

It pulls several growth levers. It is opening new stores, with 12 stores expected to open for fiscal 2024, and investing in acquisitions and improved services, especially for the professional segment. The industry is well positioned to return to growth as soon as possible, and there is every reason to believe it can continue to crush the market over the next five years and beyond.