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3 Stocks That Could Put Amazon's Returns to Shame

Amazon.com's (NASDAQ: AMZN) long-term growth trajectory has been nothing short of astounding. The company is only 23 years old, but it is already ringing up more than $150 billion in annual sales. That skyrocketing revenue line has brought investors along for a wildly profitable ride, and the stock has created lots of millionaires along the way.

But where's the next Amazon-style growth story? What does it take to just keep up with Amazon these days, starting from that $150 billion sales platform?

We asked a handful of investors here at The Motley Fool these questions, and they were quick to come up with some interesting answers. Read on to see how Mazor Robotics (NASDAQ: MZOR)AU Optronics (NYSE: AUO), and Foot Locker (NYSE: FL) could match or beat Amazon's returns, starting right now.

Image source: Getty Images.

This spring-loaded stock could be golden any minute now

Anders Bylund (AU Optronics): So let me admit that this panel maker has been a disappointing performer in recent years.

AU Optronics could skyrocket at any moment. Of course, that has been true at all times in the past five years, and the takeoff just hasn't happened yet. The stock has traded sideways since 2011, leaving shareholders with little to show for their investments. The company builds LCD displays and solar-power panels, both based on thin-film transistor technologies, and the stars just never seem to align to unlock the eternally pending promise of these spring-loaded growth industries.

But that could change in a hurry, unlocking years of pent-of value in AU Optronics shares. The stock is trading at the bargain-bin price of 3.7 times trailing earnings and 5.4 times free cash flows, as if the company is going out of business tomorrow. And before you actually jump to that conclusion, I must assure you that AU Optronics is an underrated cash machine.

Over the past four quarters, AU Optronics has produced $4.7 million of free cash flows based on top-line sales of $352 million. That's a cash profit margin of nearly 13%. The EBITDA profit ratio is nearly twice as rich, and that's the figure credit ratings are built on. The balance sheet is stacked with more cash than debt. In short, AU Optronics is in perfect financial health, just waiting for its target markets to take off.

That push could come from 4K television screens or next-generation smartphone displays. It could come from global demand for solar panels, now that the technology can meet or beat the production price of fossil fuels. The solar exposure looks like the more promising investing thesis right now, but my crystal ball is in the shop.

Long story short, there's not much risk involved in owning AU Optronics but the stock is priced for the opposite of perfection. If that long, slow fuse finally lights, AU Optronics will crush Amazon's market returns -- at least over the next couple of years.

The next big thing in surgical robotics

Steve Symington (Mazor Robotics): Shares of Mazor Robotics have more than tripled since the company first caught my eye almost exactly four years ago. But with its market capitalization still under $1.5 billion, the budding robotics-based surgical systems specialist has plenty of room to grow.

To be sure, earlier this month Mazor confirmed that it received 22 new system purchase orders in the third quarter, building on its base of 170 installed systems in just over 100 hospitals and surgery centers at the end of Q2. Combined with recurring revenue (which rose 50% last quarter, to $6.3 million) related to surgery kits and services for those systems, that should translate to record quarterly revenue of $17.2 million, up 125% from the same year-ago period.

But over the long term, Mazor believes its systems can eventually work their way into over 2,000 hospitals. And that goal should be made much easier through a co-marketing and co-promotional agreement the smaller company has secured with Medtronic (NYSE: MDT) -- that is, assuming the partnership doesn't lead to Mazor's eventual acquisition by the medical device giant before then.

For investors who buy now and watch Mazor's long-term growth story continue to play out, I think there's a great chance it could easily put Amazon's returns to shame.

Image source: Getty Images.

Betting on a beaten-down retailer

Tim Green (Foot Locker): Footwear retailer Foot Locker certainly hasn't beaten Amazon's returns this year. The stock has been a disaster for investors, down about 55% year-to-date, compared to a 30% gain for the e-commerce giant. But the extreme pessimism permeating through the entire retail sector is creating some interesting opportunities. Foot Locker is facing its fair share of challenges, but a depressed valuation could lead to exceptional returns if the company can avoid being steamrolled by e-commerce.

Foot Locker's second-quarter results weren't pretty. Comparable-store sales slumped 6%, with the company blaming weak sales of certain top styles and limited availability of new products. Adjusted earnings per share tumbled by about one-third, hit hard by lower revenue and a slumping gross margin. The company is considering adjustments to its store base and shifting more resources from real estate to digital in response to its lackluster performance.

Foot Locker's direct-to-consumer business generated about $500 million of revenue during the first half of the year, growing by 8.6% year over year while revenue from stores declined. The company is going to need to ramp up that business in order compete against online-only retailers. One thing working in Foot Locker's favor is a strong balance sheet. The company had about $1.1 billion of cash and $126 million of debt at the end of the second quarter, giving it ample resources to make investments in its online business.

Foot Locker is a turnaround story, and turnaround stories are inherently risky. But with the stock trading for less than eight times forward earnings, shares of Foot Locker could soar if the company can stop the bleeding.

10 stocks we like better than AU Optronics
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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. Anders Bylund owns shares of Amazon. Steve Symington has no position in any of the stocks mentioned. Timothy Green has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Amazon. The Motley Fool owns shares of Medtronic. The Motley Fool recommends Mazor Robotics. The Motley Fool has a disclosure policy.