The S&P 500 (^GSPC) is packed with companies that have built dominant market positions, making it a core index for investors. A select few continue to innovate and expand, setting themselves up for long-term success.
Not every big company is a great investment, and we’re here to help you find the best opportunities. Keeping that in mind, here are three S&P 500 stocks positioned to outperform.
Seagate (STX)
Market Cap: $180.1 billion
One of two remaining major hard drive manufacturers after decades of industry consolidation, Seagate (NASDAQ:STX) manufactures hard disk drives and solid state drives that store data in data centers, cloud systems, and consumer devices.
What Makes STX Stand Out?
Market share has increased this cycle as its 36.4% annual revenue growth over the last two years was exceptional
Operating margin expanded by 16.8 percentage points over the last five years as it scaled and became more efficient
Free cash flow margin grew by 14.5 percentage points over the last five years, giving the company more chips to play with
Seagate is trading at $790.60 per share, or 23.6x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
Alphabet (GOOGL)
Market Cap: $4.24 trillion
Started by Stanford students Larry Page and Sergey Brin in a Menlo Park garage, Alphabet (NASDAQ:GOOGL) is the parent company of the eponymous Google Search engine, Google Cloud Platform, and YouTube.
Why Will GOOGL Beat the Market?
Alphabet’s dominant Google Search sits on the pantheon of the best businesses ever. This is reflected in its robust long-term revenue growth and elite operating margin.
The company’s profit margins have become even higher over time, speaking to its scale advantages and operating efficiency not only in its core Search business but also in Google Cloud Platform and YouTube.
Revenue growth and increasing operating margins are the key ingredients for strong EPS growth. Google has these, and when also factoring in its share repurchases, you can see why EPS has exploded over the long term.
Alphabet’s stock price of $347.88 implies a valuation ratio of 25.9x forward price-to-earnings. Is now the right time to buy? See for yourself in our in-depth research report, it’s free.
Charles Schwab (SCHW)
Market Cap: $196.5 billion
Founded in 1971 as a disruptive force challenging Wall Street’s high fees and limited access, Charles Schwab (NYSE:SCHW) is a wealth management and brokerage firm that provides investment services, banking, and financial advice to individual investors and independent advisors.
