The bull market has driven shares of top companies to new highs, but that doesn't mean you have missed the boat. Sometimes stocks that are hitting new highs are the best bet, especially if there are catalysts that can push these stocks even higher in the near term.
Here are two such stocks that are positioned for great returns in the next year and for years to come.
1. Apple
Shares of Apple (AAPL -0.07%) have climbed 22% this year, with virtually all the gain coming after the company's earnings report in April. Apple continues to show stable financial results heading into the highly anticipated launch of Apple Intelligence, which will bring a suite of new features powered by artificial intelligence (AI) later this year.
It's been a slow year for Apple's hardware. iPhone sales were slightly down through the first half of the year, with double-digit growth in services the only bright spot. However, Apple could be at the beginning of a long stretch of solid growth.
Apple is seeing increasing customer interest in services, which reflects its growing installed base of devices at over 2.2 billion. This large installed base of devices could tee up accelerating iPhone sales, since customers who are still using older devices will need to upgrade to use Apple Intelligence.
Apple has a long history of making new technology easy to use and accessible for everyone. This will work to its advantage in the era of AI, which could solidify its brand position and benefit shareholders. The company has massive cash resources to reinvest in new services, technologies, and other opportunities to drive profitable growth for many years.
The consensus analyst estimate has Apple's earnings growing at an annualized rate of 10%. But those estimates have been trending up this year and may be on the low side of Apple's actual opportunity, as indicated by the performance of Apple stock in the last few months. The stock should deliver strong returns to investors over the next several years.
2. Netflix
Netflix (NFLX 1.24%) stock has soared 34% so far this year, following a surge in the share price in 2023. The company's efforts to convert individuals using shared passwords to paying users has greatly benefited its revenue growth. But the streaming leader is also continuing to focus on delivering higher margins and profits, which could fuel the stock over the next several years.
The password sharing initiative is driving double-digit growth in revenue, a noticeable acceleration over the single-digit growth in the same period a year ago.
But Netflix is demonstrating solid growth on the bottom line, too, which makes the stock very compelling right now. Management is committed to showing higher margins every year, while also investing in quality content and other initiatives, such as its ad-supported plan and live sports programming, to grow subscribers. Higher margins drove an 83% year-over-year increase in earnings per share in the first quarter.
Netflix is slated to stream a live boxing match between Jake Paul and Mike Tyson in November, which could become a huge opportunity for the company to attract a new subscriber demographic. Live sports streaming will also be crucial in helping Netflix provide more exclusive content to maintain its lead over the competition.
The ability to deliver balanced growth on the top and bottom lines while investing in new opportunities, including localized content tailored to different regions worldwide, makes Netflix a solid investment for the long term. The consensus analyst estimate has the company's earnings growing 29% per year over the next several years, which could double the share price within the next five years.
