Like Amazon, I expect profit margins to start expanding once the business reaches maturity. With a market cap still under $50 billion, I think there is a lot of room for Coupang stock to keep running higher into 2025 and beyond.

Ally Financial, a smaller company than Coupang, is one of the leading online-only banks in the United States. Beginning as a spinoff of the General Motors financing arm during its Great Recession bankruptcy, Ally has grown its consumer banking operations from nothing to over $100 billion in deposits. At the end of the last quarter, it had an estimated 3.26 million depositors, a number that has steadily grown from less than 1 million at the end of 2014.

How is Ally able to convince depositors to switch banks? Because of the high interest rates it pays on deposits. With zero physical banking branches, Ally has much lower overhead than legacy banks. This allows it to offer superior interest rates on deposits, which works especially well with the Federal Reserve raising the benchmark interest rate over the last few years.

Using these deposits, Ally makes loans to the automotive market. It earns a profit on the spread between what it charges depositors and what it can earn by lending out money for car purchases. At the end of last quarter, Ally had $83.6 billion in retail auto loans and $23.9 billion in commercial auto loans on its balance sheet.

In recent quarters, Ally’s delinquency rates on its automotive loans have started to rise and are now above their pre-pandemic levels. This will affect its profitability in the short term, but it is well within Ally’s guidance and a normal part of investing in a cyclical financial company.

It is still profitable with $884 million in net income generated over the past 12 months, and it pays a dividend that currently yields a healthy 3.41%. The stock trades at a P/E of 14 even on these trough earnings, a metric that should look even cheaper as its loan delinquencies normalize. With depositors continuing to switch to Ally for their consumer banking needs, I think that its total deposits will be able to grow over the next 5 to 10 years, which is the fuel for more earnings growth.

Add everything together, and Ally looks like it has all the ingredients to put up strong returns for investors who buy today and stay with it for the long haul.

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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. Ally is an advertising partner of Motley Fool Money. Brett Schafer has positions in Amazon and Coupang. The Motley Fool has positions in and recommends Amazon and Coupang. The Motley Fool recommends General Motors and recommends the following options: long January 2025 $25 calls on General Motors. The Motley Fool has a disclosure policy.

My 2 Favorite Stocks That Investors Will Be Piling Into Next Year was originally published by The Motley Fool