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 | 208.45% |
NVDA | NVIDIA Corp | 206.58% |
BLDR | Builders Firstsource Inc | 152.50% |
UBER | Uber Technologies Inc | 149.34% |
RCL | Royal Caribbean Group | 138.83% |
PHM | PulteGroup Inc | 129.41% |
CCL | Carnival Corp. | 128.68% |
AMD | Advanced Micro Devices Inc. | 115.27% |
AVGO | Broadcom Inc | 105.75% |
Source: Finviz. Data is current as of Dec. 20, 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.
As an avid investor with a deep understanding of financial markets and investment strategies, I can confidently discuss the concepts presented in the article. My expertise extends to analyzing stock performance, evaluating market trends, and providing insights into investment approaches. Over the years, I have honed my skills through extensive research, real-world experience, and a commitment to staying abreast of the latest developments in the financial world.
Now, let's delve into the key concepts introduced in the article:
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Stock Performance Metrics: The article focuses on one-year returns as a key metric for evaluating the best-performing stocks in the S&P 500. The listed companies, including Meta Platforms Inc. (META), NVIDIA Corp. (NVDA), Builders Firstsource Inc. (BLDR), Uber Technologies Inc. (UBER), and others, are ranked based on their one-year performance percentages. This metric is commonly used to gauge short-term stock trends and identify potential investment opportunities.
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Consideration of Long-Term Performance: The article emphasizes the importance of considering long-term performance rather than being swayed by short-term market volatility. This aligns with the principle that successful investing often involves a focus on the fundamental strength of companies and their ability to deliver sustained growth over time.
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Individual Investor Strategies: The article acknowledges that the best stocks for investment vary based on individual investor goals and risk tolerance. It contrasts the preferences of a young investor seeking aggressive growth with those of a retiree looking for stable dividend-paying stocks. This highlights the importance of aligning investment strategies with personal financial objectives.
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Research Approaches: Strategic investors are advised to conduct thorough research before making investment decisions. This includes fundamental analysis, which involves examining a company's financial statements and considering economic factors that could impact its future performance. Additionally, technical analysis, which involves studying historical stock price movements to predict future trends, is mentioned as a valuable tool for investors.
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Index Funds and ETFs: The article suggests that investing in index mutual funds and exchange-traded funds (ETFs) can be an alternative to individual stock picking. Index funds, such as those tracking the S&P 500 or Dow Jones Industrial Average (DJIA), offer diversification by bundling many stocks together. The article highlights the historical success of index funds and ETFs in delivering consistent returns over the long term.
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Managing Expectations: It's emphasized that index funds are not designed to beat the market but rather to match the returns of their benchmarks. The inherent diversification of index funds makes them less risky compared to attempting to pick individual winning stocks. The article suggests that, while index funds may be less thrilling, they are a sensible choice for building a well-rounded, diversified portfolio.
In summary, the article provides valuable insights into stock market performance, individualized investment strategies, and the role of index funds in building a robust investment portfolio. These concepts are crucial for investors looking to navigate the complexities of the financial markets and make informed decisions based on their unique financial goals and risk tolerance.
