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When the choice is between a meager 5% return with no risk and the potential for even greater gains, investors are naturally drawn to the latter. In this quest, only a select few S&P 500 stocks have consistently delivered growth in the past five years, including the likes of Axon Enterprise (AXON), Eli Lilly (LLY), and Warren Buffett’s prominent holding, Berkshire Hathaway (BRKB). According to an analysis by Investor’s Business Daily based on data from S&P Global Market Intelligence and MarketSmith, these nine stocks have achieved remarkable gains over the past half-decade, as well as in the current year, 2023.
Consistent Gains That Outpace Market Norms
These consistently ascending stocks have demonstrated an impressive average gain of 23.8% over the last five years. This figure stands in stark contrast to the approximately 5% return offered by certificates of deposit (CDs), and nearly doubles the S&P 500’s average annual return of 12.1% during the same period. These numbers are all the more compelling considering that the S&P 500 experienced negative returns in two of the past five years. Remarkably, this level of consistent growth is achieved by fewer than 2% of the stocks within the S&P 500, underscoring the rarity of such steadfast performance.
Seeking Safety in Volatile Times
Amidst uncertainties introduced by the post-pandemic economy and the Federal Reserve’s decisions, investors are drawn to safe havens. Jeffrey Roach, Chief Economist at LPL Financial, notes that the current landscape calls for vigilant and informed policymaking due to the disruptions caused by global shutdowns. The markets are expected to experience ongoing turbulence as a result of these complexities.
The Exemplar: Axon Enterprise
In the realm of S&P 500 stocks that consistently ascend, Axon Enterprise takes the lead. The manufacturer of nonlethal tools for law enforcement has recorded an impressive average gain of 42.3% over the past five years, without experiencing any negative years. Even during the challenging month of August, when the S&P 500 faced a downturn of nearly 4%, Axon’s shares managed to surge more than 6%. The company’s predictably increasing earnings growth contributes to its appeal, with analysts projecting a 63% rise in profits for 2023 and an additional 7.5% increase in 2024.
Eli Lilly: A Beacon of Stability
Another shining example of an S&P 500 stock that defies downturns is Eli Lilly, a company committed to pioneering neurological advancements. Over the past five years, the stock has averaged nearly 38% annual gains without a single year of decline. In contrast to the struggling S&P 500, Eli Lilly’s shares have soared more than 22% in August alone. The company’s consistent profit growth is a testament to its success, with analysts forecasting a near 20% rise in profits for the current year. This trend is expected to continue with projected growth rates of 32%, 35%, and 23% for the years 2024, 2025, and 2026, respectively.
Berkshire Hathaway’s Uninterrupted Ascendance
In a period marked by market volatility, a five-year retrospective provides valuable insights. Warren Buffett’s Berkshire Hathaway stands out for its consistent performance. The company’s shares have experienced gains in each of the past five years and have continued to perform well in 2023, with an average gain of 10.9%. While this might not be the highest return among the consistent gainers, the stock’s lower volatility is notable. Impressively, Berkshire Hathaway boasts a five-year beta of just 0.87, indicating a lower risk profile compared to the S&P 500. Warren Buffett’s own commitment is evident through his significant ownership of Berkshire Hathaway’s shares, comprising 15.1% of the outstanding shares and amounting to $116 billion. This holding constitutes nearly 98% of his total wealth, which stands at $119 billion.
While the continued success of these S&P 500 stocks is not guaranteed, their consistent track records are undeniable. As investors navigate a complex economic landscape, the appeal of these ‘can’t lose’ stocks remains a compelling proposition.
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