In a world where the stock market is constantly evolving, a select group of stocks have emerged as the “Magnificent Seven” due to their exceptional performance. Apple, Microsoft, Nvidia, Amazon, Alphabet, Meta Platforms, and Tesla have all outshone the stock market over the past five years. For instance, Microsoft, a median performer among the group, boasts an impressive compound annual growth rate (CAGR) of 26%, nearly doubling the return generated by the S&P 500 (15%). While past success is noteworthy, the true essence of investing lies in anticipating what could propel a high-performing stock even higher. So, which of these stellar stocks hold the potential to set investors up for life? Let’s delve into two that are currently on my radar.
Meta Platforms:
At the forefront of the digital landscape, Meta Platforms, known for popular social networking sites like Facebook and Instagram, commands a massive user base of over 3.3 billion monthly active users globally. This colossal reach translates into billions in revenue generated through ad placements on its platforms. In the second quarter of this year alone, Meta reported a staggering $39 billion in revenue, with a staggering 98% coming from ad sales. Despite its monumental size and strategic emphasis on digital advertising, Meta continues to exhibit unrivaled growth potential. The company reported a remarkable 22% year-over-year increase in total revenue in its latest quarter, a remarkable feat for such a large enterprise. Moreover, Meta’s free cash flow per share has been climbing steadily, currently standing at $18.82, a significant rise from $6.60 less than two years ago. This promising trend not only indicates the company’s robust financial health but also its capacity to deliver value to shareholders. With its immense scale, robust profit margins, and consistent growth trajectory, Meta Platforms emerges as a stock that has the potential to secure investors’ financial future.
Alphabet:
Another standout player in the digital advertising realm is Alphabet, a juggernaut that rakes in substantial ad-based revenue through its Google Search and YouTube platforms. In the second quarter, Alphabet recorded a massive $85 billion in revenue, with a substantial $65 billion (76% of the total) stemming from advertising on Google Search, Google Network, and YouTube. What sets Alphabet apart is its exceptional profitability, boasting an operating margin of 32%, its highest in over a decade, and well above the 10-year average of 26%. High profitability signifies efficient operations and the potential to generate profits that can be reinvested to benefit shareholders or expand the business. While Alphabet does face challenges like a recent antitrust ruling and market volatility, its solid business model and impressive operating margin make it a compelling investment opportunity for long-term investors. In uncertain times, when market sentiment fluctuates, Alphabet’s resilience and financial strength make it a stock worth considering.
In the fast-paced world of investing, identifying stocks that could pave the way for financial success is a challenging yet rewarding endeavor. The stocks of Meta Platforms and Alphabet stand out as compelling options for investors seeking long-term growth and stability in their portfolios. By strategically assessing these high-performing companies and their future prospects, investors can potentially secure a path towards financial security and success.
