Large corporations still have a lot to offer, and you can look within the S&P 500 to outperform the famed index. The leading stocks in the fund have propelled the fund’s 1-year and 5-year gains. Discovering these leaders and accumulating their shares can lead to outperformance.
If you want your portfolio to eclipse the rest of the stock market, you may want to consider these top picks.
Celsius Holdings (CELH)
Celsius Holdings (NASDAQ:CELH) is a fast-growing sports beverage that has soared by more than 5,500% over the past five years. Although the company is not in the S&P 500, it fulfills the requirements and is likely to get added in the future.
The corporation generates most of its sales in North America and is starting to expand internationally. The current business model has worked well for the company, based on its 95% year-over-year (YoY) revenue growth in Q4 2023.
Revenue in North America reached $332.8 million, while international revenue only came in at $14.6 million. International sales increased by 68% YoY, and the company’s recent efforts to get into the United Kingdom and Australia should bear solid results in the years to come.
Analysts are feeling upbeat about the stock. Its average price target suggests a 34% upside. The stock is currently rated as a Strong Buy among 10 analysts.
ServiceNow (NOW)
ServiceNow (NYSE:NOW) has also won plenty of praise from analysts and has a projected 16% upside. The stock also has a Strong Buy rating from 30 analysts. Shares have outperformed the stock market with a 177% gain over the past five years. The company’s robust business model suggests growth can continue.
ServiceNow generates recurring revenue from its cloud platform. The company has more than 8,100 enterprise customers with a 99% renewal rate. Almost 2,000 of the company’s customers have annual contract values that exceed $1 million. The company’s cloud platform helps businesses work more efficiently while delivering frictionless customer experiences.
The tech firm has been expanding its profit margins. Revenue increased by 26% YoY in Q4 2023, while net income surged by 97% YoY. ServiceNow closed out the quarter with a 12% net profit margin. The stock currently trades at a 56 forward P/E ratio. Rising profit margins should make the valuation more enticing for long-term investors.
Microsoft (MSFT)
Microsoft (NASDAQ:MSFT) has significantly contributed to the S&P 500’s ascent over the years. The largest publicly traded corporation has more than tripled over the past five years. The stock is also up by 9% year-to-date, higher than the S&P 500’s return to start the year.
Microsoft has been launching several AI initiatives in a bid to gain market share and build on its existing lead. The company’s new lightweight AI model is a more affordable option for consumers and business owners who want to harness this technology. Microsoft is also using Copilot to strengthen its product line and offer affordable cybersecurity services for individuals and small businesses.
Artificial intelligence has also improved the quality and demand for Microsoft Cloud. This segment contributed to more than half of the company’s total revenue in Q2 FY24. Microsoft Cloud revenue increased by 24% YoY, while overall revenue was up by 18% YoY.
On this date of publication, Marc Guberti held long positions in CELH, NOW, and MSFT. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Marc Guberti is a finance freelance writer at InvestorPlace.com who hosts the Breakthrough Success Podcast. He has contributed to several publications, including the U.S. News & World Report, Benzinga, and Joy Wallet.
More From InvestorPlace
- The #1 AI Investment Might Be This Company You’ve Never Heard Of
- Musk’s “Project Omega” May Be Set to Mint New Millionaires. Here’s How to Get In.
- It doesn’t matter if you have $500 or $5 million. Do this now.