We all want to beat the market. It’s easier said than done, but doing your homework can give you an edge over today’s standard exchange-traded fund (ETF) portfolio. Here are three stocks that have outperformed the market. S&P 500 Index which I think it can do again over time.
1 apple
An investment gem for years, Apple (NASDAQ:AAPL) was in the news a few weeks ago for becoming more valuable than microsoft (NASDAQ:MSFT)The company has outperformed the S&P 500 by 234% over the past five years.
It’s a favorite of Warren Buffett, and rightly so. Its products have a lot of utility, and the phone and computer businesses have a significant barrier to entry. To get into this game, you need deep pockets and infrastructure.
Detractors of my Apple pick will likely point to the 2.8% drop in revenue last year and the weak first quarter of 2024. What I think is being missed here is the potential demand Apple could create from the integration of AI-based programs into your products. .
More recently, the talk around Apple has been its announcement of Apple Intelligence, its planned artificial intelligence business, and its possible partnership with Metaplatforms on generative AI. This could be exactly what Apple needs to gain the momentum seen by stocks like NVIDIAwhose semiconductor chips are essential for AI-based businesses.
I like Apple as a bet on this burgeoning business, as it is emerging as a new source of demand for the technology company. It has the product line needed to implement AI in a way that appeals to its broad consumer base. As I said before, Apple devices offer a lot of utility. Integrating AI into them only serves to increase that advantage.
2.Costco
Wholesale Costco (NASDAQ: COST) is a top-of-the-line gem. The discount king generates consistent annual growth and profits for shareholders, and its low-price strategy positions it well in our inflationary economy, where consumers seek out the best deals.
Charlie Munger, Warren Buffett’s late partner, loved Costco, and it’s easy to see why. It has outperformed the S&P 500 by 134% over the past five years, using a strong membership base to drive comparable store sales (comps). In the first 16 weeks of the company’s fiscal year, total comps rose 4.7%, with e-commerce up 12.6%. May sales results showed comps gained 6.4%, with e-commerce sales up 15.3%.
Those numbers don’t match Nvidia’s, but the key here is consistency and profitability over time, and a business model that is beneficial to consumers at any time. Costco has averaged double-digit revenue growth over the past five years, just a fraction of years of revenue and net profit increases, and there appears to be little sign that the story will change.
3. Cava
I wish I could go back and buy it. Chipotle Mexican Grill (NYSE: CMG) Before it was Chipotle? Cava Group (NYSE: Cava) It could be your chance.
This latter restaurant chain operates very similarly to its Mexican counterpart, but focuses on Mediterranean cuisine. I challenge you to find many scale competitors in the Mediterranean space, and Cava could be a great long-term bet.
Having gone public just last year, Cava stock has outperformed the S&P 500 by roughly 100% in that time. The restaurant chain has seen significant growth as it strives to create a Chipotle-like story. First-quarter revenue rose 30.3% year-over-year to $256 million, while the total number of restaurants increased 22.8% year-over-year to 323 locations.
Despite being such a young company and a growth stock par excellence, Cava has found profitability particularly early, earning $13.28 million last year. To be fair, that’s not significant in terms of value per share, amounting to just $0.12 per diluted share, but compared to a loss of $1.30 the year before, I like to see a company focused on profitability from the start.
Full-year guidance calls for competitive growth of 4.5% to 6.5%, with net new store openings of 50 to 54. To be clear, this is an investment entirely focused on growth. Earnings are not the primary thing that will drive the stock price.
Should You Invest $1,000 in Apple Right Now?
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He Advisor on motley and silly stocks The team of analysts has just identified what they believe to be the 10 best stocks for investors to buy now…and Apple wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the years ahead.
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Randi Zuckerberg, former director of market development and spokesperson for Facebook and sister of Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. David Butler has no position in any of the stocks mentioned. The Motley Fool ranks and recommends Apple, Chipotle Mexican Grill, Costco Wholesale, Meta Platforms, Microsoft, and Nvidia. The Motley Fool recommends Cava Group and recommends the following options: long $395 January 2026 calls on Microsoft and short $405 January 2026 calls on Microsoft. The Motley Fool has a disclosure policy.
Three Great Stocks That Can Outperform the S&P 500 Originally published by The Motley Fool