Below are the best stocks in the S&P 500, measured by 52-week performance.
Are these the best stocks to invest in right now? Not necessarily. Not only is predicting the future of even the current top-performing stocks a job the pros haven’t yet mastered, but the best stocks for your portfolio aren’t necessarily the best stocks for someone else’s portfolio.
If you’re looking for the best stocks to invest in, NerdWallet’s recommendation is to invest in stocks through index funds, devoting 10% or less of your overall portfolio to individual stocks. For more on index funds, jump to below this list.
Best stocks as of January 2020
|Symbol||Company name||Security price||Price performance (52 weeks)|
|AMD||Advanced Micro Devices Inc||$48.27||160.75%|
|LRCX||Lam Research Corp||$295.20||115.39%|
|CMG||Chipotle Mexican Grill Inc||$865.28||93.57%|
|LDOS||Leidos Holdings Inc||$99.05||89.47%|
|TDG||TransDigm Group Inc||$572.00||87.08%|
|AMAT||Applied Materials Inc.||$61.37||85.78%|
|XRX||Xerox Holdings Corp||$36.62||83.46%|
|GPN||Global Payments Inc.||$184.62||81.98%|
|MKTX||MarketAxess Holdings Inc||$378.08||81.76%|
|SWKS||Skyworks Solutions Inc||$119.57||79.03%|
Data is current as of January 3, 2020
The answer for many: index funds
Picking individual stocks is difficult, which is why many investors turn to index mutual funds and exchange-traded funds, which bundle many stocks together.
When individual stocks come together into a diversified portfolio via index funds, they have a lot of power: The S&P 500 index — which includes approximately 500 of the largest companies in the U.S. — has posted an average annual return of nearly 10% since 1928.
An S&P 500 index fund or ETF will aim to mirror the performance of the S&P 500 by investing in the companies that make up that index. If you want to cast a wider net, you could purchase a total stock market fund, which will hold thousands of stocks.
» Learn more: How to invest in index funds
Within an index fund, the winners balance out the losers — and you don’t have to forecast which is which. That’s why we think low-cost index funds and exchange-traded funds — a type of index fund that is traded like a stock — should form the basis of a long-term portfolio.
Index funds won’t beat the market. They aren’t supposed to. An index fund’s goal is to match the returns posted by its benchmark — for an S&P 500 fund, that benchmark is the S&P 500. There are index funds that track a range of underlying assets, from small-cap stocks, to international stocks, bonds and commodities such as gold.
Index funds are inherently diversified, at least among the segment of the market they track. Because of that, all it takes is a few of these funds to build a well-rounded, diversified portfolio. They’re also less risky than attempting to pick a few could-be winners out of a lineup of stocks.
The downside: Some might argue they’re significantly less thrilling than chasing the current hot stocks. If you’re seeking that stock-picking rush, go for a happy middle ground: Dedicate 10% or less of your portfolio to predicting the next big thing, and use index funds for the rest.
Ready to invest in stocks or funds? Here are some of our recommended brokers.
» View all of our picks: The best brokerage firms
Need some help choosing the right investment account for you? Answer a few quick questions and we’ll point you toward the best options: