The stock market hasn’t been slowing down this year after a strong performance in 2023. The S&P 500 continues to break records and has risen by nearly 15%Â year to date. Investors continue to rake in some tremendous profits from many great investments.
Three of the best-performing stocks on the index have already more than doubled in value this year. Super Micro Computer (SMCI 1.17%), Nvidia (NVDA 4.57%), and Vistra (VST 4.58%) have all been soaring. Here’s a look at their returns, why they’ve been rallying, and whether they’re still good buys right now.
1. Super Micro Computer: 194%
The best-performing stock on the S&P 500 this year has been Super Micro Computer, also known as Supermicro. The stock has been a big play because of its role in the artificial intelligence (AI) revolution. The company provides server and storage services that are essential for businesses investing in AI and building the necessary infrastructure to support next-generation technologies and complex AI models.
Business has taken off for Supermicro due to the soaring demand for its products and services. Over the trailing 12 months, the company has generated more than $11.8 billion in revenue. That’s more than double the $5.2 billion in sales it posted for all of fiscal 2022 (which ended in June 2022). The sheer growth the company has achieved is why the company has been a hot buy with growth investors. While some companies may talk up their AI-fueled opportunities, the proof is in the results with Supermicro.
With the stock trading at a forward price-to-earnings (P/E) multiple of just 22 (based on analyst estimates), it’s arguably one of the better-priced AI stocks out there. It’s not too late to buy this surging stock, as the hype around AI could drive its share price even higher in the second half of the year.
2. Nvidia: 151%
After a monstrous year in 2023, when its share price soared by nearly 240%, Nvidia’s stock has continued to be a red-hot buy for AI investors this year as its valuation has topped $3 trillion. And it’s hard to blame them, either, given the company’s results. With limited competition to worry about in the AI chip market, Nvidia’s results have been phenomenal.
In its most recent quarter, for the period ending April 28, its top line totaled $26 billion and was up 18% on a quarter-over-quarter basis. Compared to the same period last year, the growth rate was a staggering 262%, which means sales were more than 3.5 times what they were in the prior-year period.
The company says it is seeing accelerating demand for its products and services. With AI touching just about every industry in the world, it’s hard not to like Nvidia’s long-term growth prospects. At a forward P/E of 47, it’s a pricier option than Supermicro, but its price-to-earnings-growth (PEG)Â ratio of 1.4 suggests it may not be that overpriced.
Nvidia’s high valuation could limit its gains this year, although I still expect it to rally in the weeks and months ahead due to its strong results. As long as you’re willing to hold the stock for the long term, it still may not be too late to buy the stock.
3. Vistra: 127%
Vistra isn’t in the business of selling AI chips or servers, but the energy company can still indirectly benefit from the growing popularity of generative AI. As AI use ramps up, energy needs will also increase. With Vistra investing in alternative energy sources, it’s in a good position to meet those needs while also being a more diversified energy stock.
In March, the company completed an acquisition of Energy Harbor, making it a bigger player in nuclear energy. CEO Jim Burke says the deal “represents our commitment to leading a responsible transformation of the country’s energy supply to greener energy sources through the expansion of our zero-carbon generation portfolio.”
Over the past four quarters, Vistra has posted a profit of $598 million on revenue totaling $13.4 billion. Its forward P/E multiple of 18 looks attractive, and what’s even better is its incredibly low PEG ratio of 0.75, indicating that this can still be an exceptional investment for growth investors and that there’s still room for it to rise further in value this year.
David Jagielski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy.
