Equity investment, when compared to investments in other asset classes, is said to generate higher inflation-adjusted return over the long term. Besides holding shares for the long term, the selection of the right stock is also important. Not all companies have the potential to withstand the changing economic and regulatory environment over several years. Also, stocks that have emerged winners in recent times may not necessarily remain at the top in the years ahead. Good quality stocks that have shown consistent performance across all market situations can form the core of your long term portfolio.
Here are four US large-cap stocks that have a huge market capitalization of more than $ 300 billion that have shown consistent performance over the last ten years.
The compounded annualized growth rate (CAGR) of these 4 large cap stocks has been consistently above 30 per cent per annum over the last 1-year, 3-year, 5-year and ten-years. It shows that any of these stocks when held over a 3-year or 5-year period has generated over 30 per cent CAGR and even when held over 10-years, the CAGR has been over 30 per cent. The returns are as on a specific date and hence the rolling returns may differ.
A 30% CAGR on an initial investment of $1500 (approx Rs 1 lakh) after 10 years, translates into nearly $20500, which is about Rs 14 lakh ( exchange rate considered at Rs 70 to a dollar).
(As on Aug 19)
Tesla (TSLA), NVIDIA (NVDA), Adobe (ADBE), ASML Holding N.V. (ASML) are all part of the Nasdaq 100 index. If you want to take expoure in all the stocks listed on Nasdaq 100, the Invesco QQQ is an exchange-traded fund (ETF) that gives you access to Nasdaq 100 companies in a single investment.
Tesla (TSLA): $ 673.47B
NVIDIA (NVDA): $ 518.735B
Adobe (ADBE): $ 308.393B
ASML Holding N.V. (ASML): $322.978B
Some of the top-performing US stocks such as Facebook (FB), Amazon (AMZN), Apple (AAPL), Netflix (NFLX) and Google (GOOG) collectively known as FAANG stocks are a part of the Nasdaq 100 index .
What it shows is that holding quality stocks over the long term has rewarded those shareholders who held them with conviction. How they will perform in future remains unknown and there is no assurance that they will continue to deliver similar returns. However, as an investor, selection of quality large-cap stocks should be the endeavour to pick and hold them for the long term.
Disclaimer: The investing decision in these or any other stock should be taken on your own after carefully evaluating the business and other fundamentals of the company or after consulting one’s financial advisor. It is not a recommendation to buy, hold or sell in any of the stocks. Financial Express Online does not bear any responsibility for their investment advice.