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Looking for stocks with strong performance track records? The S&P 500‘s a great place to start the search. In this index, there are many companies that have generated incredible long-term returns for investors.
Here, I’m going to highlight three brilliant S&P 500 stocks that have returned more than 20% a year over the last decade (in US dollar terms). Let’s get into it.
Amazon
First up, we have Amazon (NASDAQ: AMZN) and I calculate that over the last 10 years, its share price has risen 1,223%, which translates to about 29% a year.
I first bought this stock for my own portfolio in late 2020 (near $150) and it has done well, rising nearly 60%. I just wish I’d bought it sooner.
Back in 2017, I remember looking at it when it was around $60 and thinking it was too expensive (the price-to-earnings (P/E) ratio was very high). The lesson here – expensive stocks can still generate amazing long-term returns.
Looking ahead, I remain excited about this stock (it’s my largest holding). Given how diversified the company is (e-commerce, cloud computing, digital advertising, etc), I believe it still has substantial long-term growth potential.
That said, if an investor was looking to buy Amazon shares, I’d suggest they consider waiting for a pullback. Since August, the stock’s had a huge run and if upcoming earnings (next week) miss expectations, it could be volatile.
Mastercard
Another US stock that’s done well for me, and has been a brilliant long-term performer, is payments powerhouse Mastercard (NYSE: MA). It’s up about 590% over the last decade which equates to a return of about 21% a year (it’s also paid small dividends).
Like Amazon, I believe Mastercard has a ton of potential. In the years ahead, billions of transitions are set to shift from cash to card. Meanwhile, growth of industries such as e-commerce and travel should also benefit credit card companies. So for me, this is a core holding I expect to retain for many years.
That said, the valuation’s relatively high right now. Currently, the P/E ratio’s about 35. That doesn’t leave much room for setbacks (eg a slowdown in consuming spending). So again, if an investor was interested in this stock, I think they should, again, consider waiting for a pullback.
Intuitive Surgical
Finally, we have Intuitive Surgical (NASDAQ: ISRG), the leading player in the robotic surgery market. It’s risen about 956% over the last decade, which translates to a gain of around 27% a year.
This is a stock I’ve had on my watchlist for many years now. I nearly bought it a few years ago when it was under $250. I wish I had – now it’s near $600.
I’m keen to get this stock into my portfolio at some stage because I expect the market for robotic surgery to grow significantly over the next decade. However, the 72 P/E ratio’s too high for me right now. This leaves almost no room for error. If hospitals were to slow their spending on robotic surgery, the stock could underperform.
So for now, it’s also going to stay on my watchlist. I’m hoping the price comes down a bit in the next 12 months.
