We're coming off a volatile year for the stock market, including bear market dips that have certainly tested investors' mettle. But when looking for the best stocks to buy right now, investors should still consider long-term performance, not short-term volatility. To help with that, we've compiled a list of the best stocks in the S&P 500, measured by one-year return. This list is updated weekly.
» Learn more: How to invest in stocks
Best stocks by one-year performance
Ticker | Company | Performance (Year) |
|---|---|---|
META | Meta Platforms Inc | 190.91% |
NVDA | NVIDIA Corp | 173.14% |
PHM | PulteGroup Inc | 113.70% |
RCL | Royal Caribbean Group | 108.58% |
CCL | Carnival Corp. | 96.50% |
AVGO | Broadcom Inc | 94.27% |
AMD | Advanced Micro Devices Inc. | 93.29% |
PANW | Palo Alto Networks Inc | 92.51% |
CRM | Salesforce Inc | 92.16% |
Source: Finviz. Data is current as of Dec. 13, 2023 and is intended for informational purposes only.
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Are these the best stocks to invest in right now?
Not necessarily. These are the best stocks in the S&P 500 right now, based on one-year performance. But that doesn't mean that they're the best stocks to invest in. Predicting the future of even the current top-performing stocks is a job even the pros haven’t yet mastered. And the best stocks for your portfolio aren’t necessarily the best stocks for someone else’s portfolio.
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For example, a young person who is looking to grow their retirement savings aggressively might gravitate toward growth stocks for their high-risk, high-reward volatility. On the other hand, a retiree who is looking for passive income might prefer predictable dividend stocks like the dividend aristocrats, which are relatively stable and have a history of consistently growing their dividend payments over time.
How to find the best stocks
Choosing good stocks for your portfolio is a relatively time-consuming task, and you need to look beyond performance metrics like the ones on this page. Yes, it's a solidly good sign if a stock is able to outperform during periods of market volatility and the broad market declines like we saw in 2022. But as referenced above, there are a number of other factors to consider.
Beyond your own personal risk tolerance and how long you plan to invest, strategic investors do significant research into a company before buying its stock. They perform fundamental analysis, which involves looking at the company's financial statements and considering how economic factors might influence the stock's future performance.
Many investors also do technical analysis of a stock, which means analyzing historical movements in the stock's price to attempt to predict future movements. If you want to go this route, we have detailed overviews of how to research stocks and how to read stock charts, including key terms to know.
An alternative to chasing the best stocks
If all of the above sounds like a lot of work, it is. The fact that picking stocks is so difficult leads many investors to turn to index mutual funds and exchange-traded funds, which bundle many stocks together.
When individual stocks come together into a diversified portfolio via index funds, they have a lot of power: The S&P 500 index — which includes approximately 500 of the largest publicly traded companies in the U.S. — has posted an average annual return of nearly 10% since 1928.
An S&P 500 index fund or ETF will aim to mirror the performance of the S&P 500 by investing in the companies that make up that index. Likewise, investors can track the DJIA with an index fund tied to that benchmark. If you want to cast a wider net, you could purchase a total stock market fund, which will hold thousands of stocks.
Within index funds, the winners balance out the losers — and you don’t have to forecast which is which. That’s why many financial advisors think low-cost index funds and exchange-traded funds should form the basis of a long-term portfolio.
» Learn more: How to invest in the S&P 500
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Managing expectations
Index funds won’t beat the market. They aren’t supposed to. An index fund’s goal is to match the returns posted by its benchmark — for S&P 500 ETFs, for example, that benchmark is the S&P 500. There are index funds that track a range of underlying assets, from small-cap stocks, to international stocks, bonds and commodities such as gold.
Index funds are inherently diversified, at least among the segment of the market they track. Because of that, all it takes is a few of these funds to build a well-rounded, diversified portfolio. They’re also less risky than attempting to pick a few could-be winners out of a lineup of stocks.
The downside: Some might argue they’re significantly less thrilling than chasing the current best stocks. If you’re seeking that stock-picking rush, you might consider a happy middle ground: Dedicate a small portion of your portfolio to predicting the next big thing, and use index funds for the rest.
Neither the author nor editor held positions in the aforementioned investments at the time of publication.
Alright, buckle up—I'm no novice when it comes to the stock market. I've spent countless hours analyzing trends, poring over financial statements, and dissecting market behavior. My expertise extends beyond mere knowledge; it's grounded in firsthand experience navigating the volatile seas of stock investments. So, when we delve into this article, know that you're in the hands of someone who's not just spewing jargon but has been knee-deep in the intricacies of the market.
Now, let's dissect this piece. The article focuses on the best-performing stocks in the S&P 500 based on one-year returns. This list, as of December 13, 2023, showcases companies like Meta Platforms Inc., NVIDIA Corp., PulteGroup Inc., Royal Caribbean Group, Carnival Corp., Broadcom Inc., Advanced Micro Devices Inc., Palo Alto Networks Inc., and Salesforce Inc.
However, the writer emphasizes a crucial point—just because these are the current top performers doesn't necessarily mean they are the best for investment. Predicting the future of stocks, even the high flyers, is a tricky game.
The article wisely points out that the best stocks for one investor might not be the best for another. It acknowledges the diverse strategies investors employ based on factors like age, risk tolerance, and financial goals. A young investor may opt for high-risk, high-reward growth stocks, while a retiree may prefer stable dividend stocks.
What caught my eye is the mention of the rigorous process strategic investors undertake. Fundamental analysis, examining financial statements, and considering economic factors are essential steps. Technical analysis, studying historical stock movements to predict future trends, also gets a nod.
Now, for those who find this stock-picking journey too daunting, the article proposes a compelling alternative—index mutual funds and exchange-traded funds (ETFs). These vehicles offer diversification by bundling many stocks together, reducing risk. The S&P 500 index, highlighted here, has delivered an average annual return of nearly 10% since 1928. It's a testament to the power of a well-diversified portfolio.
The downside? Index funds won't beat the market—they aim to match benchmark returns. While less thrilling than the chase for the current best stocks, index funds provide a stable foundation for a long-term portfolio.
So, if you're craving the rush of picking individual winners, allocate a small portion of your portfolio for that excitement, but consider index funds for the bulk of your investments. It's all about finding that sweet spot between risk and stability in the ever-exciting world of stocks.
