The stock market has not slowed down this year after a strong performance in 2023. S&P 500 continues to break records, up nearly 15% year to date. Investors continue to rake in huge profits from many great investments.
Three of the best performing stocks on the index have already gained more than doubled in value this year. Supermicrocomputer (NASDAQ: SMCI), Nvidia (NASDAQ: NVDA)And Prospect (NYSE: VST) have all risen dramatically. Here’s a look at their returns, why they’re up, and whether they’re still good buys right now.
1. Supermicrocomputer: 194%
The best-performing stock on the S&P 500 this year has been Super Micro Computer, also known as Supermicro. The stock is a big player because of its role in the artificial intelligence (AI) revolution. The company provides server and storage services that are essential to companies investing in AI and building the infrastructure needed to support next-generation technologies and complex AI models.
Things have been booming for Supermicro amid rising demand for its products and services. Over the past 12 months, the company has generated more than $11.8 billion in revenue. That’s more than double the $5.2 billion in sales the company posted for the entire 2022 fiscal year (ending in June 2022). The tremendous growth the company has achieved is why it’s a hot buy among growth investors. While some companies may tout their AI-driven opportunities, the proof is in Supermicro’s results.
With a price-to-earnings (P/E) ratio of just 22 (based on analyst estimates), it’s probably one of the better-priced AI stocks out there. It’s not too late to buy this rising stock, as the AI hype could drive the stock even higher in the second half of the year.
2. Nvidia: 151%
After a monster year in 2023 that saw its stock soar nearly 240%, Nvidia’s stock remains a hot buy for AI investors this year as its valuation surpasses $3 trillion. And it’s hard to blame them, given the company’s track record. With limited competition to worry about in the AI chip market, Nvidia’s results have been phenomenal.
In the most recent quarter, for the period ending April 28, revenues were $26 billion, up 18% quarter-on-quarter. Compared to the same period last year, the growth rate was a staggering 262%, meaning revenues were more than 3.5 times higher than in the prior-year period.
The company says it’s seeing increasing demand for its products and services. With AI touching nearly every industry in the world, it’s hard not to like Nvidia’s long-term growth prospects. With a forward P/E of 47, it’s a more expensive option than Supermicro, but its price-to-earnings growth ratio (PEG) of 1.4 suggests it might not be all that overvalued.
Nvidia’s high valuation could limit its gains this year, though I still expect it to rally in the coming weeks and months on the back of its strong results. As long as you’re willing to hold the stock for the long term, it may not be too late to buy.
3. Vistra: 127%
Vistra doesn’t sell AI chips or servers, but the energy company can still benefit indirectly from the growing popularity of generative AI. As the use of AI increases, so will energy needs. With Vistra investing in alternative energy sources, it is well-positioned to meet those needs while also being a more diversified energy company.
In March, the company completed an acquisition of Energy Harbor, making it a larger player in nuclear power. CEO Jim Burke said the deal “represents our commitment to leading a responsible transformation of the nation’s energy supply to greener energy sources by expanding our carbon-free generation portfolio.”
Over the past four quarters, Vistra posted a profit of $598 million on total revenues of $13.4 billion. The forward price to earnings ratio of 18 looks attractive and what’s even better is the incredibly low PEG ratio of 0.75. This suggests that this could still be an exceptional investment for growth investors and that there is still room for further appreciation this year.
Should You Invest $1,000 in Super Micro Computer Now?
Before you buy Super Micro Computer stock, you should consider the following:
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David Jagielski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy.
These 3 S&P 500 Stocks Have All More Than Doubled This Year. Can They Keep Rising in the Second Half? was originally published by The Motley Fool
