Investors have lots of choices when picking what stocks to buy. Even among some of the most valuable companies out there, worthwhile opportunities might be available.

Apple (NASDAQ: AAPL) and Amazon (NASDAQ: AMZN), for example, have produced monster returns during the past couple of decades. But which of these behemoth "Magnificent Seven" stocks is the better buy right now?

The case for Apple

Thanks to its lineup of popular products, Apple has become one of the world's most recognizable brands. This brand moat has supported the company's impressive financial success over the years. According to Interbrand, Apple's brand is estimated to be worth $503 billion, more than any other business on Earth.

What makes Apple special is that it has created a business model that successfully combines its hardware and software offerings. This so-called ecosystem gives the business a durable competitive advantage. The result is strong customer loyalty. Once consumers get familiar with using Apple's offerings, they are less likely to leave.

Consequently, this means the company has historically benefited from pricing power. Its smartphones, tablets, and laptops carry premium price tags. But they are met with robust demand when each new iteration is released.

Apple is also incredibly profitable, which is another reason to appreciate the company. In the past five years, the business has posted an average gross margin of 42% and an average operating margin of 29%. This leads to lots of free cash flow -- to the tune of $100 billion in the fiscal year ended Sept. 30, 2023.

Management hasn't been shy about returning this capital to shareholders. During the past nine months, the business paid $11 billion in dividends and repurchased $70 billion of its stock. This favorable capital-return program is a staple of the Apple investment thesis.

The case for Amazon

One undeniable reason to buy Amazon shares is because the business benefits from multiple secular tailwinds. It's the dominant leader in e-commerce, as 38% of all online spending in the U.S. goes through Amazon.com. Plus, Amazon has its hands in cloud computing with Amazon Web Services (AWS), streaming with Prime Video, and digital advertising. These trends should continue to propel the business in the years ahead.

Historically, investors have criticized Amazon for not prioritizing profitability. But management has been making major improvements, slashing costs, and focusing on driving greater efficiencies. In the second quarter, Amazon reported operating income of $14.7 billion. That figure was up an impressive 91% versus the same period a year ago.

I mentioned Amazon Web Services before. This is a key growth and profit engine that gets a lot of attention. Revenue was up 19% in the last quarter, with an operating margin of more than 35%.

AWS also positions the company to be a leader in the artificial intelligence (AI) race. AWS looks to be an important infrastructure-service provider for businesses that want to develop their own AI capabilities, with offerings like data computing and storage, as well as machine learning.

Despite the size of the business, analysts anticipate considerable growth. According to the average of Wall Street analyst estimates, Amazon is projected to increase revenue and earnings per share (EPS) at yearly rates of 10.7% and 36.4%, respectively, between 2023 and 2026.

One critical factor

Both Apple and Amazon are fantastic businesses, a statement most investors will not argue with. However, there's one important factor to consider before picking a winner.

Investors need to look at valuation as part of their decision-making process. As of this writing, Apple shares trade at a price-to-sales (P/S) ratio of 9.1. That represents a sizable 32% premium to its trailing-five-year average.

On the other hand, Amazon trades at a P/S of 3.4. This is in line with its five-year history. Therefore, I believe that Amazon is the better stock to buy right now. If we look out over the next three-to-five years, Amazon's return potential is higher than Apple's seems to be.

Should you invest $1,000 in Amazon right now?

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Neil Patel and his clients have no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon and Apple. The Motley Fool has a disclosure policy.

Best Stock to Buy Right Now: Apple vs. Amazon was originally published by The Motley Fool