7 Growth Stocks That Should be your pick instead of Apple

Despite this fact — and the company’s apparent value — AAPL stock still fell 3% in response to earnings late last week.

Keep in mind that Apple trades at only 13 times earnings. Therefore, with services growing 24% to record revenue of $6.3 billion, and investors knowing that Q1 will be terrific with high iPhone 7 demand, AAPL stock should have soared after earnings. The fact that it fell 3% is alarming, and it’s also telling about how investors view Apple.

Apple has become more of a commodity play, like a utility stock, than a technology company that continues to dominate in hardware, software and services.

There are other choices instead of Apple now.

1. Amazon - However, in technology, investors are not always investing in the company. They are investing in leadershipAmazon, at $388 billion in market capitalization, might not seem any better than Apple. However, Amazon.com’s Amazon Web Services asset has a real shot to be worth $300 billion all by itself. Then, you combine its e-commerce operations, hardware, software, music, video content and Bezos himself, and you quickly realize that AMZN stock could still go much, much higher.Best of all, AMZN is anything but a commodity stock. It is expected to grow 28% this year and another 22% next year. Those are attainable targets, and if Amazon beats estimates, it will go higher.
2.  Facebook -  Yes, Facebook has a $377 billion market capitalization, but truth be told, FB stock is not that expensive. It trades at 26 times forward earnings estimates. For a company that’s expected to grow 36% next year, a forward P/E of 26 is not that bad.As I detailed in a previous article, research firms can not keep up with Facebook. Each quarter, the margin of revenue and EPS beats are getting bigger. Therefore, analysts expect 36% growth and earnings of $5.08 per share in fiscal 2017.

   However, Facebook could really end up posting 41% growth and an EPS of $6 per share, if the current trend continues. Then, FB stock trades at 22 times FY2017 earnings estimates.At that point, I don’t know many who would ignore a company with 40% growth and trading at just 22 times earnings. That’s a lot more attractive than GDP-like growth at a 13x multiple.

3.  

   Alibaba -  Alibaba has higher gross merchandise volume than any company in the world, Wal-Mart Stores, Inc. included, and creates revenue much like Facebook with advertising and marketing within that large ecosystem. Yes, merchandise volume growth is slowing, but BABA is expected to grow 30% next year because its take rate continues to rise. (Take rate is a measure of how much the company is making on advertising fees and commissions.) At 31x forward earnings, it looks expensive. However, you are not just getting Alibaba’s massive Chinese e-commerce business, but also its growing business throughout the world and investment portfolio, which may be the most impressive of any company in the world.

4. Alphabet - AAPL is $80 billion more valuable, but Alphabet is climbing fast as it enters new businesses and succeeds at just about everything it touches. While Alphabet’s growth has declined some, it still maintains double-digit growth and trades at an attractive valuation of only 20 times forward earnings. Plus, investors get Larry Page and Sergey Brin. Much like Amazon, Alphabet continues to evolve. Alphabet, as Google, started off as an internet search company. It now owns the world’s largest mobile operating system and is a real thorn in the side of wireless and wireless companies.In a technology world that is constantly evolving, Alphabet is a company that I see as a leader in innovation and change. Apple has yet to prove it can succeed outside its own ecosystem.
5. Paypal - This is a company that grew active customers by 11% in its last quarter and saw a 24% increase in processed transactions. Now that PayPal is split from eBay, it can pursue new opportunities and steal even more market share because of its powerful brand. We have watched this happen with Intuit and also Facebook in the last month alone. With double digit growth and a 24x multiple to FY2017 EPS, PYPL is a strong to own and a business that could eventually cause big problems for Visa and MasterCard.
6. Tesla Motors -  Tesla makes great cars, and while I doubt Musk will meet his bullish targets, I do think it becomes a mass production company. Most investors are consumed with its valuation relative to the likes of General Motors Company and Ford Motor Company. However, Tesla is worth the premium because it is not just manufacturing vehicles, but also involved in charging stations, direct sales and all aspects of the business.Beyond that, Tesla is well-positioned to be the face of all things battery and solar powered. The acquisition of SolarCity Corp. is imperative, because it will allow Tesla to not only install solar panels but also use its Gigafactory to produce batteries to power homes and businesses even at night.
7. XPO Logistics - This is a company that has grown from under $300 million in revenue in 2012 to expected revenue of $14.8 billion this year, and a clear path to $20 billion in the next couple years.The knock on XPO has been a lack of profitability due to its growth. However, XPO crushed expectations for its past quarter, proving the company can and will be very profitable. I expect more of the same moving forward, especially when the company reports earnings next week. XPO will quickly soar from a multiple of just 2.2 times FY2017 EBITDA. In fact, given its growth and earnings potential, this is a stock that could even double — quickly.