• The S&P 500 includes the 500 largest publicly traded companies in the US
• SPY investors are rewarded for years of loyalty
• Eleven promising stocks from the S&P 500 are expected to form an exclusive growth club
The S&P 500
Alongside the NASDAQ Composite and the Dow Jones, the S&P 500 is one of the three most important stock market barometers in the USA. The index was introduced in March 1957, but calculations date back to 1950. The companies are evaluated and the index is published by the rating company Standard & Poor’s, which assesses the creditworthiness of companies. The Index consists of the 500 largest publicly traded companies in the US and reflects their performance. It is also used as an indicator for the general development of the US stock market. The weighting of the values is based on the market capitalization of the companies. The S&P 500 is a price index, which is why dividend payments are not included in the calculation of the stock market barometer. Standard and Poor’s decides which companies are included in the index.
Loyal ETF investors are rewarded
As MarketWatch explains, some investors might need a reminder that patience can be rewarded, especially after 2022, which saw the S&P 500 index fall 18 percent (dividends reinvested) and the stock market rally that peaked in early February reached, was rather disappointing and volatile. Looking at the 10-year price development of the SPDR S&P 500 ETF Trust (SPY), which tracks the reference index, initially shows a positive picture. However, closer examination also reveals many broad declines over the past decade. However, over the entire period, SPY’s price rose 153 percent, while its total return, with dividends reinvested, was as much as 205 percent. Investors who remained loyal and reinvested despite setbacks were ultimately rewarded. So if you as an investor think long-term and want to build up a financial cushion for retirement over decades, it may be worth investing money regularly in a broadly diversified index fund with low fees. According to MarketWatch, one advantage of this strategy is that you can buy at lower prices during weak market phases and thus achieve higher returns in the long term.
11 promising stocks
But what about more aggressive investors who want to profit from individual companies? As MarketWatch explains, investors looking to increase returns on individual growth stocks can also focus on quality for a long-term approach. Accordingly, there are currently eleven promising stocks from the S&P 500 that are expected to form an exclusive growth club for investors. The research started with the S&P 500 and then used consensus estimates from analysts polled by FactSet to narrow the list. A consistent data base was obtained by using consensus estimates for the calendar years 2022, 2023 and 2024. Companies with no available estimates or companies reporting no earnings or negative free cash flow for any year were excluded. The list was initially reduced to 290 companies. In addition, only companies with projected annual growth rates of at least 15 percent for revenue, 10 percent for earnings per share and 10 percent for free cash flow per share between 2022 and 2024 were selected. The focus on revenue growth underscores that this is an initial screen for aggressive long-term investors. The list was finally reduced to eleven companies.
The first company stock listed is Enphase Energy. The energy technology company has an estimated compound annual revenue growth rate of 31.7 percent through 2024. Estimated earnings per share growth rate is 26.2 percent and estimated free cash flow is 28.6 percent.
Estimates of the growth rate for electric car maker Tesla are 29 percent for revenue, 17.5 percent for earnings per share and 35.1 percent for free cash flow.
Estimated growth rates for specialty chemicals group Albemarle are 27.2 percent for sales, 13.9 percent for earnings per share and 46.4 percent for free cash flow.
The developer, publisher and distributor of computer games, Take-Two Interactive Software Inc., has estimated growth rates of 25 percent for revenue, 37.6 percent for earnings per share and 116.8 percent for free cash flow.
Paycom Software Inc. is an online payroll and human resource technology provider. The company’s estimated annual growth rates are 22.4 percent for revenue, 22.0 percent for earnings per share and 28.5 percent for free cash flow.
ServiceNow Inc. is a technology company that offers a cloud computing platform that enables companies to replace manual working methods with digital ones. Estimated compound annual growth rates for ServiceNow Inc. are 22.1 percent for revenue, 22.3 percent for earnings per share and 22.7 percent for free cash flow.
Fortinet Inc. is a technology company primarily active in the field of information security. The company’s estimated annual growth rates are 20.9 percent for revenue, 18.4 percent for earnings per share and 15.8 percent for free cash flow.
DexCom Inc. develops continuously measuring glucose sensors for diabetes patients. The company has estimated growth rates of 19.6 percent for revenue, 29.8 percent for earnings per share and 39.3 percent for free cash flow.
Ceridian HCM Holding Inc. is a human capital management software company. Estimated compound annual growth rates for Ceridian HCM Holding Inc. are 17.8 percent for revenue, 42.3 percent for earnings per share and 134.5 percent for free cash flow.
At the energy company EQT Corp. Estimates of growth rate for revenue are 16.8 percent, earnings per share are 30.9 percent and free cash flow is 35.8 percent.
At NVIDIA Corp. is one of the largest developers of graphics processors and chipsets for personal computers, servers and game consoles. Here, estimates of the growth rate for revenue are 16.2 percent, earnings per share are 30.4 percent, and free cash flow is 86.8 percent.
Editorial office finanzen.net
This text is for informational purposes only and does not constitute an investment recommendation. finanzen.net GmbH excludes any claims for recourse.
Leverage must be between 2 and 20
No data
More news about Albemarle Corp.
Image sources: Katherine Welles / Shutterstock.com, Nadezda Murmakova / Shutterstock.com