If you are looking to make a fortune in the stock market, look no further than the S&P 500. This is the benchmark index of the 500 largest publicly traded companies in America. Since 1957, this index has provided an average annual return of 9-10%. Its constituents are the largest and most influential businesses in the world and have made incredible investments for patient investors.
These three S&P 500 stocks have proven to be long-term winners in their respective industries. What do they have in common? Wide industry moats with strong levels of cash flow and world-class management teams. Despite being some of the most valuable companies in the world, these three stocks are still positioned well for future growth. Here are 3 of Wall Street’s favorite S&P 500 stocks to add now and hold forever.
Amazon.com Inc (AMZN)
Amazon (NASDAQ:AMZN) is a global eCommerce and cloud services company that was founded in 1994 by former CEO and current Executive Chairman, Jeff Bezos. According to Yahoo Finance, the stock has a one-year average price target of $206.20, which is nearly $30.00 higher than the current share price.
This is a company that has completely changed the global shipping industry forever. Amazon has made 2-day delivery the norm with its Prime membership, which has over 200 million subscribers worldwide. Amazon also has the largest enterprise cloud services brand with its Amazon Web Services (AWS) platform. This segment brought in more than $90 billion in revenue for Amazon in 2023. How much does Wall Street love Amazon? Over 62% of Amazon’s 10.65 billion shares outstanding are owned by institutions.
It’s incredible to realize that Amazon has a 5-year revenue CAGR of 20% considering how large the business already is. As a result, AMZN does trade at 41x future earnings although its 3.1x future sales is more palatable. Compared to other mega-cap tech, that P/S ratio is a discount.
Meta Platforms Inc (META)
Meta Platforms (NASDAQ:META) is the company formerly known as Facebook. META has 54 Wall Street analysts who cover the stock with the average price target sitting at $504.54, which is about $20.00 higher than its current price.
A majority of Meta’s revenue comes in the form of ad revenue for its many platforms. Between Facebook, Instagram, Threads and WhatsApp, Meta has more than 3 billion daily active users in its ecosystem. This year, Meta also made a bigger push into the hardware industry with its Ray-Ban Meta smart glasses and the latest versions of its Oculus AR/VR headsets. As of March 2024, Meta is the seventh-largest company in the world by market cap.
Over the past year, shares of Meta have returned more than 144%. Understandably, the multiples for its stock have also escalated although even after the rally, the stock only trades at about 24x forward earnings and 9.4x sales. Impressively, Meta’s 10-year revenue CAGR of 33% outpaces other members of the Magnificent 7. To top it off, Meta provided the ultimate flex of its balance sheet by initiating a quarterly dividend for its shareholders.
Visa Inc (V)
Visa Inc (NYSE:V) is a global payments company that is best known for its credit and debit card services. As of 2023, Visa cards were accepted in more than 200 countries with over 4.3 billion cards in circulation. Wall Street has 34 analysts who cover Visa’s stock and they have an average price target of $302.49.
Visa is the second-largest credit card issuer in the world next to China’s Union Pay in terms of card transactions. Shares have returned nearly 85% over the past five years not including dividend reinvestment. Visa is a component of the S&P 100, the S&P 500, and the Dow Jones Industrial Average. It is often looked at as a bellwether stock for economic strength and consumer sentiment.
For a blue-chip stock, Visa does trade at a loftier valuation. Shares currently trade at about 28.5x forward earnings and 17.5x sales. This gives Visa a higher price-to-sales valuation than both Amazon and Meta. Despite this, Visa’s consistent growth and stock returns cannot be discounted and the company is far less volatile than tech stocks and less impacted by macroeconomic factors like higher interest rates.
On the date of publication, Ian Hartana and Vayun Chugh did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.