A handful of top S&P 500 stocks to buy tend to take the spotlight, many with good reason. Still, companies like Nvidia (NASDAQ:NVDA) comprise an increasingly high position in the index’s overall ranking and that is reasonable cause for concern for those prioritizing effective diversification planning.
At the same time, plenty of stinkers exist among S&P 500 stocks, making broad-based index investing less than ideal. Boeing (NYSE:BA), Lululemon (NASDAQ:LULU), and Intel (NASDAQ:INTC) are each down nearly 40% since January alone, with indications that each (and others) is facing further pain ahead.
That’s why focusing your S&P 500 stocks to buy selection on a handful of well-known names near the top coupled with diversified, lesser-known winners in the middle is a surefire way to create an alternate series of S&P 500 investments — without the relative overweight of a select few companies, while simultaneously cutting out some dead wood.
Amazon (AMZN)
Amazon (NASDAQ:AMZN) is an easy pick for a list of top S&P 500 stocks to buy. Well-loved, pervasive, and continually expanding, Amazon’s wide-ranging offerings and cultural innovation ensure that the company will remain a staple in our lives for the foreseeable future — not to mention part of our collective investment portfolios.
While Amazon’s ongoing retail efforts impact consumers and are noteworthy in their own right, Amazon’s potential as a long-term player among S&P 500 stocks is its cloud service segment. As more companies pivot to remote models or try to save hardware costs by relying on cloud data storage, Amazon’s web services are becoming a key part of many other business models and operations. That’s why Amazon’s recent $25 billion quarterly sales stat is huge news — Amazon is on track to secure $100 billion from its web service segment alone, setting up a perpetual cash flow machine as network switching costs tend to be high and existing clients stick with what they know.
Deere & Co (DE)
Deere & Co (NYSE:DE) is one of my favorite S&P 500 stocks to buy. But it’s in an unlikely category: robotics and automation. While robotics and automation are hot topics, Deere tends to go under-appreciated in a wider market that favors startups and more niche offerings. That’s a mistake because—once Deere unveils the full scope and extent of its robotics offerings—the company could quickly become one of the top robotics stocks in the world.
Deere’s flagship offerings in the category include fully autonomous tractors and tillage machines, which leverage advanced mapping and sensing tech to save agricultural producers time and energy when it comes to prepping fields or harvesting.
And, while the autonomous tractors have clear and viable operational prospects today, Deere could see big money coming down the pipe in the future as part of licensing agreements to leverage its newly developed tech.
For example, self-driving car companies could license portions of Deer’s neural network sensing mechanisms that determine if the area is safe to drive over or not, or drone delivery startups could license Deer’s mapping tools to build a city delivery overlay.
Intuitive Surgical (ISRG)
Intuitive Surgical (NASDAQ:ISRG) is a powerhouse among S&P 500 stocks to buy, seamlessly integrating innovative technology, robotics, and the global growth trajectory of healthcare. As a key player in both the S&P 500 and NASDAQ-100 indices, Intuitive Surgical is undeniably stable and increasingly relied upon as a provider of high-end, specialized medical equipment.
Unlike competitors focused on conventional medical hardware, Intuitive Surgical revolutionizes surgery to enhance provider efficiency and patient outcomes.
The company is expanding aggressively worldwide as the healthcare industry continues its post-pandemic rebound. The latest quarterly report highlighted a significant 16% year-over-year increase in the global use of its premier robotic surgery system, the da Vinci platform, and a consistent installation rate (312 units installed in Q1 2023 and 313 units installed this year).
This progress, coupled with an 11% sales increase and a rise in net income to $545 million from $355 million, solidifies Intuitive Surgical’s position as one of today’s top stocks to buy.
Keep an eye on Intuitive Surgical this year as the company unveils its next-generation da Vinci platform. According to CEO Gary Guthart, this new model will boast “10,000 times the processing power” of current versions, significantly enhancing data analysis, sensing technology, and overall digital and analytical functions.
VICI Properties (VICI)
VICI Properties (NYSE:VICI) owns and partially operates multiple famous Las Vegas properties, including Caesar’s Palace, the Venetian, and MGM Grand.
This impressive portfolio alone makes VICI worth considering, as Vegas will unlikely lose its global appeal anytime soon. The REIT entered the public market relatively recently, in 2017, following Caesars Entertainment’s (NASDAQ:CZR) bankruptcy proceedings. While Caesars Entertainment still operates Caesars Palace, VICI owns the land and property itself, creating a self-sustaining flywheel that effectively transfers cash from gamblers’ pockets into VICI’s with minimal disruption in the middle.
Since its IPO, VICI’s stock has returned 60%, with gross returns exceeding 120% when factoring in dividends. VICI has maintained a solid 5%+ dividend over the past seven years, with its current 12-month trailing yield at 5.78%. This competitive yield beats most high-yield savings accounts today while the stock itself offers plenty of room to run — in other words, typifying the best long-term S&P 500 stocks to buy.
Tesla (TSLA)
I think Elon Musk, love him or hate him, remains a once-in-a-generation business magnate and eternal innovator. That’s why, despite recent challenges, I see buying Tesla (NASDAQ:TSLA) at today’s prices as one of the best long-term investment opportunities among all S&P 500 stocks.
Moreover, the company’s current prospects are better than many suggest. While car sales have slumped, this reflects the broader economic landscape rather than Tesla’s potential. Additionally, Tesla is maturing and diversifying its revenue streams, similar to legacy automakers and their cash flow-generating machines.
In its most recent filing, Tesla posted a 25% increase in services and a 7% rise in energy generation and storage sales. Although these top-line increases often go unnoticed, they are crucial. As Tesla’s market matures, early forays into alternative revenue streams will be essential for its long-term positioning.
Finally, Musk’s promises of developing artificial intelligence and robotics within the wider Tesla ecosystem have real potential. It may take another decade to realize those gains, much like Tesla’s stock over the past ten years, but the long-term prospects are promising.
Meta (META)
Meta Platforms (NASDAQ:META) is often top-of-mind when mentioning tech stocks to buy, and for good reason. The company’s pervasive operational arms touch most of us daily, fostering a culture of growth and innovation. Fortunately for long-term buyers, the current per-share pricing is discounted after shares slid due to management’s spending breakdown and a muted sales forecast, despite a 117% increase in quarterly net income. Meta’s performance indicators were stellar for the first quarter of 2024, with highlights including higher daily active user rates, improved ad impressions, increased ad spending, and over $15 billion returned to shareholders. Despite this, the stock dropped dramatically — but don’t let that dissuade you.
Much of the short-term turbulence came from higher cost projections, which is actually a positive sign. A planned record-high series of capital expenditures, primarily focused on enhancing Meta’s artificial intelligence capabilities, weighed on investors’ minds. Zuckerberg noted that this would “grow [Meta’s] investment envelope meaningfully before [it makes] much revenue from some of these new products.”
While some may view Zuckerberg’s varied metaverse initiatives as a historical pre-play for Meta’s AI prospects, it’s important to consider the company’s long history of forward-thinking projections that take time to bear fruit. Given Meta’s track record, this temporary dip presents a compelling opportunity among S&P 500 stocks to buy.
Microsoft (MSFT)
Microsoft (NASDAQ:MSFT) is last on the list of S&P 500 stocks to buy. Unlike Google (NASDAQ: GOOG, NASDAQ: GOOGL), it offers institutional and individual investors smart money management, significant long-term upside, and forward-thinking management that continues to innovate despite the company’s size.
Microsoft’s strategic positioning within the AI sector will likely benefit the company significantly in the future. Even if you’re skeptical of some of the more extravagant AI claims, it’s clear that AI threatens legacy search engines while offering new productivity tools that enhance Microsoft’s existing software suite. Microsoft’s investment in leading AI firm OpenAI gives it a front-row seat and a strong position to capitalize on the next big technological advancements.
We find ourselves in a position similar to the early 2000s, when the potential of search engine technology was just emerging, and no one fully grasped its future profitability. No public company is as well-aligned with that future potential as Microsoft, and its role in doing so aligns itself well with nearly every prudent investment strategy.
On the date of publication, Jeremy Flint held no positions in the securities mentioned. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.