In our latest EasyResearch feature, we have the awesome Chuck Saletta (contributor to Motley Fool) sharing some fantastic insights on the top US Stocks like Tesla, Nvidia, Apple and Microsoft. While investing in stocks can provide great long-term returns, the short run can certainly be rocky.
With the stock market down so far from its recent highs, it’s easy to lose track of the longer-term performance and potential that companies have. Still, as an investor, it’s critically important to remember that a share of stock is simply an ownership stake in a business.
While the market may move a company’s shares up and down on a whim, what really matters over time is how well the underlying business generates cash and for how long into the future it can continue. Of course, that’s easier said than done when you’re staring down recent losses.
Still, a bit of a longer-term focus can go a long way towards providing perspective in tough times. With that in mind, here’s a lookback on four large US stocks available on the EasyEquities platform, looking at their performance as of October 27, 2023. Performance is measured in US dollars, including an estimate of the impact of reinvested dividends if applicable.
No. 1: Tesla (NASDAQ: TSLA)
Since the end of September, Tesla’s shares are down a bit over 17%. That’s a fairly substantial dip in under a month. Still, those same shares are up an astounding 68% since the end of 2022. Looking back even further, Tesla’s shares are up over 640% since the end of 2019 -- before COVID-19 knocked the world for a loop.
Tesla has incredible potential as a company involved in leading the electrification movement. Between its electric cars (and related charging systems), solar panels, and battery backup systems, Tesla is leading the way to the possibility of a lower-carbon future. That promise -- along with the company’s ability to actually turn a profit -- has helped it deliver astoundingly strong returns over the past few years.
Unfortunately, with such large moves up, investors have to expect relatively high levels of volatility and price swings. Sure, the recent 17% downswing feels rough, but for longer term investors, the gains they’ve seen despite those recent troubles generally make it all worthwhile.
No. 2: NVIDIA (NASDAQ: NVDA)
A pioneer in the business of discreet graphics cards, NVIDIA has seen its share of boom and bust cycles. Beyond that foundation, its cards have played a central role in both cryptocurrency mining and, more recently, in Artificial Intelligence processing.
The benefit of being involved in some of the hottest trends in the market is that your shares can benefit while the potential looks limitless. The downside, however, is that when the market sours on a trend, those same shares simply look like they have that much farther to fall.
NVIDIA’s shares are down around 7% since the end of September, reflecting concerns that export restrictions on its AI chips may restrict it total addressable market. Still, since the end of 2022, they’re up around 77%, and looking back to that pre-COVID era at the end of 2019, they’ve delivered 591% in total returns.
No. 3: Apple (NASDAQ: AAPL)
A business with a longer-term track record of consistent profitability than either Tesla or NVIDIA, Apple’s shares haven’t fallen nearly as much in October. Indeed, its shares are down slightly less than 2% since the end of September. Of course, that same consistency is a key reason why Apple’s stock is “only” up around 30% in 2023 and “only” around 135% since just before we ushered in the craziness that was 2020.
Although people have complained that Apple’s innovation has slowed in recent years, consumers continue to buy its phones, watches, computers, and other electronic devices. In addition to the hardware it sells, Apple makes money off of services like its app store, iTunes, and Apple TV.
Apple consumers tend to find its ecosystem is “sticky” -- meaning that once they’re buying Apple hardware, they tend to want to continue buying Apple products. That stickiness is a key reason why the company is typically able to charge premium prices, despite those claims of slower innovation. Of course, should that trait disappear, then Apple’s reputation as a more consistent performer may also be at risk.
No. 4: Microsoft (NASDAQ: MSFT)
The world’s preeminent computer operating system and office productivity company, Microsoft has also found itself at the center of the Artificial Intelligence boom thanks to a very shrewd investment. A major backer of OpenAI and its ChatGPT model, Microsoft has the benefit of first-mover access to that generative AI technology and is rapidly implementing it in its services.
Perhaps in part because of that first mover framework, Microsoft’s shares are actually up a bit in October, delivering gains of just over 4%. Those same shares have delivered around 38% returns so far in 2023 and a still strong (just not in comparison to the others on this list) 116% since the end of 2019.
Beyond the move into Artificial Intelligence, Microsoft is benefitting from an aggressive push into subscription services for packages like its Office platform. In the subscription model, Microsoft sees regular payments from people who may have otherwise bought their software once and simply held on.
A longer term perspective makes a huge difference
As rough as the market has been to many stocks recently, as these four large and successful businesses have shown, what happens over the longer term may tell a much different story. Prospective investors in these or any other stocks should look beyond the short term price changes and towards the businesses’ cash generating prospects over time when deciding what to buy and sell. A longer term, fundamental focus can go a long way towards helping investors get through tough times like these.
Just to keep you in the loop, at the time of publication, Chuck Saletta owned shares of Microsoft.
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