The turning point we’ve all been waiting for has arrived: the new bull market. It’s actually been around for the past 15 months, as the S&P 500 roared higher from its bear market low, but we can only confirm this phase of market optimism once an index has reached a new high. That happened this month, offering investors a great way to start the new year.
As we question how long this new bull market will last and whether there’s still time to benefit, history shines some hopeful light. Bull markets have lasted significantly longer than bear markets — almost 9 years versus 1.4, according to data compiled by market observers. This means there’s still ample time to get on board with the bull market momentum. To dive right into the wave, here are three top stocks to buy like there’s no tomorrow.
Image source: Getty Images.
Apple: Solid as the Core of a Bull Market
Apple (NASDAQ: AAPL) has demonstrated its strength over time, growing earnings and key metrics like free cash flow and return on invested capital (ROIC). The gains in ROIC in particular show the company knows how to deploy its cash wisely, which is one reason to be optimistic about its future.
AAPL Return on Invested Capital data by YCharts.
Another reason to love this top consumer-goods player is for its moat, or competitive advantage, and that’s its brand strength. Apple fans keep coming back to products like the iPhone and Apple Watch regardless of the price or the time they may have to wait for the launch of the latest version.
Adding to this, the market giant continues to grow its audience. In the most recent quarter, half of iPad and Mac buyers were new to those products. This brand strength means we should be confident about Apple’s ability to deliver revenue growth over time.
Finally, this huge installed base of devices, topping two billion, opens the door for services-revenue growth as users sign up for digital content and other features. Services revenue has reached records in recent quarters and is higher margin than product revenue.
All of this shows Apple remains a monster growth stock that could lead gains in this bull market.
Tesla: Riding the Electric Wave
For the first time, the best-selling vehicle in the world is an electric vehicle (EV) — and it’s a Tesla (NASDAQ: TSLA) Model Y. The EV giant delivered more than 1.2 million of the model last year, showcasing its own strength and the strength of EVs in general.
Focusing on Tesla in particular, the company, although facing competition, has demonstrated solid financial performance. Even with lowered prices and a considerable drop in operating margin, Tesla is transitioning to lower its production costs and prioritize volume and innovation, which has helped it deliver strong results.
For instance, in the last quarter, free cash flow surged 45% to more than $2 billion, and the company’s cash level increased 31% to more than $29 billion. Additionally, the cost of goods sold has declined to almost $36,000 per vehicle from nearly $40,000 in the same quarter a year ago.
This means the company is financially positioned to deliver on its promises of innovation, such as advancing self-driving technology. Tesla shares declined in January, offering investors a great opportunity to get in on this top bull market — and long-term — buy.
Nvidia: Powering the AI Revolution
AI is set to revolutionize the world, and Nvidia (NASDAQ: NVDA) is playing a crucial role in this potential revolution. The company’s graphics processing units (GPUs), thanks to their incredible speed, power the training or the “deep learning” of AI tools so that they can deliver answers to complex questions and complete complicated tasks.
Today, Nvidia holds more than 80% share of this market, and though it faces competition, it’s likely this chip giant will stay ahead of the game. Nvidia invests heavily in research and development to maintain this lead. In the most recent quarter, Nvidia’s R&D spending climbed more than 18% to $2.2 billion, demonstrating its commitment to staying at the forefront of AI technology.
Nvidia doesn’t depend on just one industry or one specialty. Nvidia’s GPUs are still a top choice for gaming applications and graphics, and the company’s AI chip uses span a broad range of industries from computing to healthcare. The AI leader has plenty of room to run and could lead this bull market higher.
Should you invest $1,000 in Apple right now?
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Adria Cimino has positions in Tesla. The Motley Fool has positions in and recommends Apple, Nvidia, and Tesla. The Motley Fool recommends Intel and recommends the following options: long January 2023 $57.50 calls on Intel, long January 2025 $45 calls on Intel, and short February 2024 $47 calls on Intel. The Motley Fool has a disclosure policy.