Over the past 20 years, the S&P 500 index has provided a respectable 10.4% average annual return. Nevertheless, certain companies have not just kept pace, but they’ve significantly outpaced the broader market, delivering exceptional long-term returns. A recent deep dive by Morgan Stanley’s Counterpoint Global Insights has pinpointed the top 20 S&P 500 stocks, focusing on their annualized total returns (CAGR) from 2005 to 2024.
The Powerhouse Performers: Returns That Defy Expectations
Indeed, these top 20 stocks have achieved an average annual return of 25.8%, more than double the S&P 500’s performance. To begin with, NVIDIA leads the charge, boasting an impressive 39.2% annualized return. This remarkable growth, as you might expect, is largely attributed to the surging demand for artificial intelligence and advanced graphics processing technology. Subsequently, Netflix follows closely, delivering a 36.5% return, driven by its expansion within the streaming industry. Then, Apple secures the third position with a 32.0% return, benefiting from strong product sales and its strategic shift towards services revenue.
Beyond the Big Three: Other Notable Achievers
Furthermore, a range of other companies have also delivered exceptional results. For instance, Booking Holdings, Texas Pacific Land Corporation, and Monster Beverage have each achieved annualized returns exceeding 28%. Additionally, Amazon, Salesforce, and Deckers Outdoor have also emerged as top performers, each delivering returns above 24%.
Factors Driving the Success: Innovation and Market Dynamics
Unquestionably, these companies have consistently outperformed the S&P 500’s average. Consequently, the analysis highlights several key factors contributing to their success, including innovation, market expansion, and shifts in consumer behavior. Particularly, technology firms have dominated the list, with NVIDIA, Apple, and Netflix capitalizing on advancements in digital services and rising consumer demand.
Sector Diversification: Healthcare, Consumer, and Industrial Giants
Moreover, other sectors have also played a crucial role. For example, healthcare and pharmaceuticals have seen significant growth, with Regeneron Pharmaceuticals and Intuitive Surgical delivering robust returns. Similarly, consumer and industrial companies such as Domino’s Pizza, O’Reilly Automotive, and Old Dominion Freight Line have demonstrated steady growth over the period.
A Detailed Look: The Top 20 List
To summarize, here are the top 20 best-performing S&P 500 stocks by annualized returns from 2005 to 2024:
- NVIDIA — 39.2%
- Netflix — 36.5%
- Apple — 32.0%
- Booking Holdings — 30.7%
- Texas Pacific Land Corporation — 28.4%
- Monster Beverage — 28.0%
- Intuitive Surgical — 26.9%
- Amazon — 25.8%
- Salesforce — 24.4%
- Deckers Outdoor — 24.3%
- Regeneron Pharmaceuticals — 24.3%
- Monolithic Power Systems — 24.0%
- Tyler Technologies — 23.6%
- Fair Isaac Corporation — 22.3%
- Old Dominion Freight Line — 22.0%
- O’Reilly Automotive — 21.9%
- Domino’s Pizza — 21.7%
- Quanta Services — 20.3%
- Lennox International — 20.2%
- Alphabet — 20.2%
