2 Growth Stocks That Have Beaten the Market in Just 2 of the Past 5 Years

Investor patience has been tested over the past five years. Since the end of 2020, there has been one bear market in 2022, followed by a severe, but brief, market sell-off earlier this year due to concerns about tariffs and their impact on the economy. Despite all that turmoil, the S&P 500 has nearly doubled since December 2020, including dividends.

Ultimately, business fundamentals take over and drive stock prices higher over time. Investors in Netflix (NASDAQ: NFLX) and Amazon (NASDAQ: AMZN) can certainly attest to this. These top growth stocks have been battered in recent years, yet their businesses continue to demonstrate excellent growth potential, making them solid long-term investments.

Image source: Netflix.

Netflix

Netflix stock has climbed 24,000% since 2005, but has underperformed the market since 2020, rising 80% compared to the S&P 500's 99% gain. It underperformed the market in 2021, 2022, and 2025, as of mid-December. Year to date, the shares are up 5% compared to the 17% gain for the S&P 500.

The stock experienced a steep decline in 2022 due to subscriber headwinds, but since then, it has been on a tear, surging 218%. The recent dip coincides with a broad sell-off in several growth companies in the technology sector. However, this could provide a great entry point for buying shares.

The business is performing exceptionally well. Netflix is dominating the streaming market, with more than 300 million paying households. It has paying members in more than 190 countries, yet there is still considerable potential for Netflix to continue growing.

Analysts expect its revenue to increase by 15% in 2025, according to Yahoo! Finance. Over the last year, Netflix generated $10 billion in net profit on $43 billion in total revenue, and these profits are potentially funding a significant expansion of its content offerings. If Netflix closes the recently announced acquisition of Warner Bros Discovery, including its film studios and HBO, it will only enhance the company's revenue potential through a deeper library of content.

With this momentum, the subscriber losses in 2022 that drove the stock down 51% seem like a distant memory. Netflix picked itself up by continuing to invest in expanding its content, cracking down on password-sharing, and launching an advertising-supported subscription tier to boost subscriber growth.

Netflix has a significant advantage due to its massive membership base, widening content offering, and extensive brand power. These advantages will continue to serve the company and its shareholders well for years to come. The consensus estimate among analysts predicts its earnings per share will grow at an annualized rate of approximately 24% for the foreseeable future. That should be enough earnings growth to potentially fuel market-beating returns for investors.

Image source: Amazon.

Amazon

Amazon is another wealth-building investment for investors who have patiently held it over the last 20 years, but the stock has only beaten the market in two of the past five years. Amazon's stock underperformed the S&P 500 in 2021 and 2022. It has also trailed the index in 2025, up about 1% vs the S&P 500's 17% gain at the time of writing.

Amazon is known as the leading e-commerce business globally. Still, its expansion into cloud computing, advertising, entertainment services through Prime, and consumer devices puts Amazon in a different league than its competitors. These non-retail services account for 59% of the company's revenue and generate the majority of the company's profit.

All these businesses, taken together, are performing well. Amazon's total net sales growth has trended higher over the past three years. Third-quarter sales grew 13% year over year to $180 billion, driven by solid sales growth across all operating segments.

The acceleration in its cloud computing business, which is its most profitable segment, is good news for Amazon's bottom line. Over the past year, Amazon reported a net profit of $76 billion, and investors might be underestimating further growth.

The stock's underperformance in recent years is not justified based on the company's significant improvement in profitability. The stock is trading at a price-to-cash-flow ratio of 18, much lower than its previous 10-year average of 27 times cash flow. This seems low considering Amazon has grown its cash from operations to more than $130 billion on a trailing-12-month basis, representing a 229% increase over the past three years.

On a more traditional price-to-earnings basis, Amazon's forward multiple of 28 on next year's earnings estimate seems quite reasonable. As management focuses on growing the cloud business and rightsizing costs in the e-commerce operation, there is likely to be significant growth in the company's profitability, enabling it to deliver market-beating returns for investors over the next five years. Analysts predict Amazon's earnings to grow at an annualized rate of 18% over the next several years.

John Ballard has positions in Amazon. The Motley Fool has positions in and recommends Amazon, Netflix, and Warner Bros. Discovery. The Motley Fool has a disclosure policy.