It's common to seek guidance from people who have reached the top of their craft. Younger athletes tend to listen more closely when it's a professional athlete giving advice; students tend to pay more attention when it's coming from a professor; investors tend to take notes about money when it's coming from a billionaire -- particularly when those billions came from investing.
While billionaires generally have different risk tolerances and financial resources than the average individual, there is nothing wrong with looking at their investment moves to find inspiration. These three high-flying stocks are common in billionaire's portfolios and can make great additions to your portfolio, too, if you're interested in tech stocks.
NASDAQ: GOOGL
Key Data Points
1. Alphabet
After reporting its first-quarter earnings, Google parent Alphabet (GOOG +2.66%)(GOOGL +2.81%) surged over 10% in a single day, putting the company in the $2 trillion club and furthering its all-time high.
Alphabet's stock surged partly because the company announced its first-ever dividend, $0.20 per share quarterly. The dividend yield isn't anything to write home about, but it points to the company's new philosophy of returning shareholder value via dividends instead of strictly stock buybacks.
That said, Alphabet also announced it would buy back around $70 billion worth of shares, highlighting management's confidence in its direction. This move is much needed, too, after Alphabet has been criticized for lagging in the recent artificial intelligence (AI) arms race -- much of which it helped lay the foundation for.
Regardless of how investors may feel about Alphabet's AI position, the company continues to earn loads of cash. Its first-quarter revenue was around $80.5 billion, up 15% year over year, and its operating margins increased by 7% to 32%.
GOOGL Revenue (Quarterly) data by YCharts.
Since its launch, Alphabet has been at the forefront of many tech innovations, and I see no reason for this to suddenly stop going forward. It has elite tech talent, a huge wallet, and arguably more relevant data than any other tech company with AI aspirations. Those are key ingredients in the recipe for longevity.
2. Apple
While the S&P 500 and other high-profile tech stocks have enjoyed positive gains through 2024, Apple (AAPL +1.05%) has been headed in the opposite direction.
One "good" thing about Apple's stock price slump is that it gives investors a more attractive entry point. With a price-to-earnings (P/E) ratio of around 26, Apple is trading below its average for the past five years. That alone doesn't make Apple an automatic buy, but when you consider it's one of the premier blue chip companies, it becomes pretty compelling.
NASDAQ: AAPL
Key Data Points
Investors have been concerned with slowing iPhone sales, but that's a shortsighted issue in the grand scheme. Yes, iPhone sales have slowed (as have smartphones in general), but Apple has over 2 billion active iPhones, giving it a great foundation to continue its expansion into various services.
Few companies' financials are even remotely comparable to Apple's. It has over $73 billion of cash on hand (cash, cash equivalents, and marketable securities), giving it plenty of breathing room to weather downturns and expand via acquisitions if it chooses to do so.
Like Alphabet, Apple has been a fan of stock buybacks to return shareholder value. It's also how Apple keeps its earnings per share (EPS) healthy, even while revenue is growing modestly.
AAPL EPS Basic (Quarterly) data by YCharts. EPS = earnings per share.
Apple hasn't been the high-flying stock its investors have become accustomed to, but it's still one of the world's best companies. I'd feel comfortable holding on to it for the long haul.
3. Meta Platforms
Meta Platforms (META +0.40%) recently released its Q1 earnings, and it was a tale of two reactions. On one side, investors weren't too happy to hear about Meta's 2024 spending plan, sending the stock down by over 17% in a single day.
On the other side, some noted that this spending was necessary to boost Meta's AI infrastructure going forward, and considering it ended Q1 with $58.1 billion in cash and marketable securities, this move wouldn't be a long-term financial strain for Meta.
NASDAQ: META
Key Data Points
Spending plans aside, Meta has shown growth in many key business areas, including user growth and how it monetizes these users. Its 3.24 billion family daily active people in March 2024 was up 7% year over year, and it increased its average revenue per person to $11.20 from $9.47 in Q1 2023. As a platform that depends on increasing eyeballs and monetizing them, both of those are reassuring.
Looking at forward P/E ratios, Meta also looks to be the best value from the "Magnificent Seven" stocks.
TSLA PE Ratio (Forward) data by YCharts. PE = price to earnings.
Meta's financials are getting back on track, and the recent dividend announcement ($0.50 per share quarterly) should incentivize investors to approach the stock with a more long-term mindset.
