We all aspire to outshine the market. Yet, it’s no walk in the park. However, meticulous research can endow you with a leg up on the conventional ensemble of exchange-traded funds (ETFs) prevalent in the current investment landscape. Here lie three stocks that have eclipsed the S&P 500, with the potential to replicate this success over the chronicle of time.
Apple: A Pinnacle of Investment
A perennial investment jewel, Apple (NASDAQ: AAPL) grabbed headlines a few weeks ago for surpassing Microsoft (NASDAQ: MSFT) in valuation. Over the past five years, Apple has eclipsed the S&P 500 by a staggering 234%.
Apple holds a special place in Warren Buffett’s heart, and for good reason. Its products boast substantial utility, and entering the phone and computer domains necessitates deep pockets and robust infrastructure.
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Critics of my endorsement of Apple may point to last year’s 2.8% revenue dip and the lackluster first quarter of 2024. Yet, they may be overlooking the potential demand Apple could stimulate through the integration of AI-based programs into its products.
Recent buzz around Apple involves its unveiling of Apple Intelligence, an upcoming AI venture, and a potential collaboration with Meta Platforms on generative AI. This could be the catalyst Apple needs to replicate the success seen by companies like Nvidia, whose semiconductor chips are pivotal for AI-centric businesses.
Costco: The Blue-Chip Gem
Costco Wholesale (NASDAQ: COST) shines as a blue-chip treasure. The discount giant consistently delivers annual growth and earnings for shareholders, with its low-cost strategy positioning it favorably in our inflationary economy, where consumers seek the utmost value.
Charlie Munger, Warren Buffett’s esteemed partner, held Costco in high regard, and understandably so. Over the last five years, Costco has outpaced the S&P 500 by an impressive 134%, driven by a robust member base that propels comparable store sales (comps).
In the initial 16 weeks of the company’s fiscal year, total comps surged by 4.7%, accompanied by a 12.6% uptick in e-commerce. May’s sales numbers displayed a 6.4% rise in comps, with e-commerce sales soaring by 15.3%.
Cava: The Rising Star
Long for a time machine to invest in Chipotle Mexican Grill before its glory days? Cava Group (NYSE: Cava) might just offer you that chance.
Operating similarly to its Mexican counterpart but with a focus on Mediterranean cuisine, Cava stands as a unique player in the Mediterranean dining arena. Finding prominent competitors in the Mediterranean space is no easy task, making Cava a compelling long-term prospect.
Having entered the public market only last year, Cava shares have outperformed the S&P 500 by approximately 100% in that short span. The eatery chain has witnessed significant expansion as it aspires to emulate Chipotle’s success.
For a nascent company and quintessential growth stock, Cava has achieved profitability remarkably early, generating $13.28 million in the past year. While this amounts to a meager $0.12 per diluted share, compared to a loss of $1.30 the previous year, this early focus on profitability is an encouraging sign.
Full-year forecasts anticipate comps growth of 4.5% to 6.5%, along with 50 to 54 net new store openings. Clearly, this is an investment centered on growth, with earnings playing a secondary role in influencing share prices.