Key Points

SpaceX carries a high valuation.
Amazon's fast-growing cloud computing business has a bright outlook.
TJX Companies still has expansion opportunities.

Space Exploration Technologies (NASDAQ: SPCX), commonly called SpaceX, has certainly captured media and investor attention in recent months. Following its initial public offering, any investor can now choose to invest in the Elon Musk-led company.

Yet the valuation for this currently unprofitable company should give investors reason to pause. It is also a complex business that proves difficult to evaluate. It encompasses a social media platform, rocket manufacturing and launches, broadband services, and artificial intelligence.

Turning to other growth companies, these two consumer goods sector firms appear to be stronger investment choices. They are profitable, expanding, and trade at far more reasonable valuations than SpaceX.

Here is a closer look at each one.

Image source: Getty Images.

1. Amazon

When many people consider Amazon (NASDAQ: AMZN), its online retail operations and devices such as Alexa come to mind. These form part of the company's North American and international divisions, which generate most of its sales. Its fast-growing cloud computing business, Amazon Web Services (AWS), produces most of the company's profit.

AWS continues to increase sales and profits at a rapid pace. It was already performing well, and the swift adoption of generative artificial intelligence points to an even larger role for its data centers.

The business holds a competitive edge thanks to Amazon's enormous scale, given the vast resources required to build and maintain data centers. That creates barriers for new entrants. Among the three largest players, AWS holds the highest market share at 28 percent at the end of the first quarter. Microsoft's Azure and Alphabet's Google Cloud represent the other major competitors.

AWS second-quarter sales rose 36.8 percent year over year to 42.2 billion dollars, lifting operating income 63.6 percent higher to 16.6 billion dollars.

The lower-margin North American and international segments have also performed well. Amazon's total sales grew 19.6 percent compared to a year ago, reaching 200.6 billion dollars.

Meanwhile, the valuation became more attractive this year, as measured by the price-to-earnings ratio. With investors concerned about management's capital expenditures, including 220 billion dollars this year, the P/E multiple contracted from well above 30 to 22. The shares have become less expensive than the S&P 500 index, which currently has a P/E ratio of 29.

2. TJX Companies

TJX Companies (NYSE: TJX) sells discounted apparel and home goods. The company has operated for nearly half a century, so it has been executing effectively for a long time.

It functions as an off-price retailer. That means its retail brands, including TJ Maxx, Marshalls, and HomeGoods, purchase merchandise from manufacturers at steep discounts. Wholesalers accept these prices for various reasons, such as excess inventory from weak demand, canceled orders from other retailers, and out-of-season items. The company typically passes savings to customers, aiming to offer merchandise at 20 percent to 60 percent below traditional retailers.

The business model allows the company to perform better during tough economic periods, since wholesalers hold more inventory and TJX gains greater negotiating power. With consumers pressured by high prices, this represents one of those periods.

TJX same-store sales across all brands have continued to show strong growth. Overall, fiscal first-quarter comps rose 6 percent, and it is not only growing sales. Diluted earnings per share increased 29 percent to 1.19 dollars. The results covered the period ended May 2.

It also continues to expand. Last year, TJX opened 129 new stores, added another 48 in the first quarter, and ended the period with 5,262 locations.

This year, TJX shares, up 2.6 percent, have underperformed the S&P 500's 11 percent gain. That has created a better valuation, however. TJX's P/E ratio contracted from 34 to 31 during this time.

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Lawrence Rothman, CFA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Amazon, Microsoft, and TJX Companies. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.