The best-performing US stocks of the past are not always going to be the top dogs going forward. But they could still be worth a look – particularly if they have shown their ability to deliver strong and consistent returns over an extended period.
We take a look at the latest analysis from investment firm 7IM, which reveals the top-performing companies in the S&P 500 over the short, medium and long term.
You are probably expecting to see a long list of tech companies. And, to some extent, you would be correct. Players like Nvidia have delivered bumper returns in recent years, becoming some of the most popular stocks with investors.
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Apple is one of the biggest success stories of this millennium too. If you had invested $1,000 in the tech giant 20 years ago, it would be worth more than $450,000 today, according to data from Morningstar Direct.
However, the top tables also reveal life outside of the Magnificent Seven. For example, you might be surprised to see that the top-performing stock over the past 20 years is not a tech company, but Monster Beverage Corp.
“If you’ve followed the investment headlines in recent years, this feels surprising – tech has seemed like the only game in town. But this is exactly why diversification needs to be taken seriously,” says David Freitas, investment writer at 7IM.
“Concentration in any one space isn’t just about exposure to the potential lows. Having the blinkers on can also mean big opportunity costs,” he adds.
Best-performing stocks this year
Analysis from 7IM reveals that these are the seven best-performing US stocks so far in 2024 – the ‘alternative Magnificent Seven’, if you like.
| Company | Total return (YTD) |
|---|---|
| 1. Super Micro Computer Inc | 167% |
| 2. NVIDIA Corp | 78% |
| 3. General Electric Co | 62% |
| 4. Constellation Energy Corp | 62% |
| 5. NRG Energy Inc | 49% |
| 6. Howmet Aerospace Inc | 44% |
| 7. Chipotle Mexican Grill Inc | 40% |
Source: Bloomberg and 7IM as of 3 May 2024.
Only one Magnificent Seven tech stock features – Nvidia. However, the top performer is another tech stock, Super Micro Computer.
This tech infrastructure company supplies the servers needed to support generative AI, and has benefitted from the same tailwinds that are driving Nvidia. In fact, it enjoys close links with the chipmaker giant.
Super Micro Computer’s recent success propelled it into the S&P 500 earlier this year. This is likely to “attract further buying interest from tracker funds in particular”, says Richard Hunter, head of markets at Interactive Investor.
Despite this, the company’s share price has fallen since peaking in March, as its latest quarterly revenues came in below analysts’ expectations.
Other sectors outside of tech feature in the table too. The energy, aerospace and food sectors are all represented, again highlighting the importance of diversification.
Meanwhile, Apple and Tesla are notably absent from the top table year-to-date, having had a tough year so far in 2024. Both are battling an increasingly competitive marketplace in China, among other headwinds.
Best-performing stocks of the past five years
It can be tempting to look at year-to-date returns for a sense of how a company is doing in the here and now. However, it is important to remember that short-term returns rarely paint the full picture.
What’s more, a company that can deliver consistent, sustainable returns is more valuable than a flash in the pan. As such, Freitas describes five years as a “fairer balance” when assessing company performance.
Most people adopt an investment horizon of at least three to five years to help iron out any short-term volatility. Typically, it isn’t wise to invest your money in the stock market if you will need to withdraw it sooner than this.
These are the top-performing stocks over the past five years. Again, a broad range of sectors are represented across tech, energy, building materials and healthcare.
| Company | Total return (January 2019-present) |
|---|---|
| 1. Super Micro Computer Inc | 2,724% |
| 2. NVIDIA Corp | 2,440% |
| 3. Enphase Energy Inc | 2,056% |
| 4. Builders FirstSource Inc | 1,538% |
| 5. Tesla Inc | 771% |
| 6. Quanta Services Inc | 766% |
| 7. Moderna Inc | 719% |
Source: Bloomberg and 7IM as of 3 May 2024.
Super Micro Computer tops the league table again, but it’s worth pointing out that the majority of its returns have come in the past year, with the first nine weeks of 2024 proving particularly lucrative. This highlights the importance of looking at the consistency of returns, as well as overall capital gains.
What’s more, investors should remember the key tenet of investing – that past performance is no guarantee of future returns. If you look at Moderna, for example, you will see that the bulk of its returns over the past five years were concentrated in 2020 and 2021. The stock soared during this period as it developed and released its Covid vaccine.
Of course, we are now operating in a very different context and the company will be reliant on other products as sales of its Covid vaccine continue to wane. It is hoping to release a new respiratory syncytial virus (RSV) vaccine later this year, subject to FDA approval.
Likewise, while Tesla has delivered strong returns over the past five years (coming fifth in the list), its year-to-date performance has been pretty dismal. The e-vehicle manufacturer has suffered a slowdown in sales and production this year thanks to the tough economic backdrop, supply chain issues, and challenges in China.
Best-performing stocks of the past 20 years
Again, the top performers over the past 20 years have come from a range of different sectors. What’s more, the top performer is not a tech giant, but a drinks company.
| Company | Total return (January 2004-present) |
|---|---|
| 1. Monster Beverage Corp | 61,801% |
| 2. Apple Inc | 53,690% |
| 3. NVIDIA Corp | 48,514% |
| 4. Intuitive Surgical Inc | 20,012% |
| 5. Booking Holdings Inc | 18,419% |
| 6. Netflix Inc | 14,330% |
| 7. TransDigm Group Inc | 12,636% |
Source: Bloomberg and 7IM as of 3 May 2024.
Monster Beverage Corp develops, markets, sells and distributes energy drinks. It has strong brand awareness and an in-depth understanding of its blue-collar target market. Its clever marketing strategy and a distribution partnership with Coca-Cola have been key factors in its success.
Furthermore, Monster does not bottle its own beverages or distribute its own products. In other words, it has an asset-light business model. This has proved a significant advantage.
As Bruce Packard pointed out in a recent MoneyWeek article, bottling plants have high capital costs. By staying away from this part of the process, Monster has been able to invest in branding, marketing and sponsorship instead of physical equipment.
Monster’s success highlights the importance of looking across a broad range of sectors when researching opportunities for your portfolio. The likes of Apple and Nvidia have delivered glittering returns over the past two decades, but there is a world beyond Big Tech too.
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