2024 has been a great year for S&P 500. The S&P 500 is a market index of the 500 largest publicly traded companies in the U.S. stock market exchange, accounting for almost four-fifth of the entire market cap of publicly traded companies in the U.S.
As of writing, the S&P 500 is up almost 15% year-to-date and the index increased by more than 700 points. It has had the best start in the presidential election year history, and the economy overcame the fear of the anticipated recession from high interest rates.
The gains were driven by mega cap AI companies like Amazon (NASDAQ:AMZN), Microsoft (NASDAQ:MSFT), and Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL). While some investors may bring up concerns about rising high concentration in a handful number of tech giants, history proves that the returns are better under a concentrated market.
Below are the best three S&P 500 stocks to buy this summer.
Alphabet (GOOG, GOOGL)
The tech giant Alphabet is part of the Magnificent Seven that has proven to be a winning long term investment. It is one of the five publicly traded U.S. companies with over $2 trillion market cap.
One of the most noticeable changes in Alphabet’s business is in Google Cloud. Just four years ago, Google Cloud reported a 42.9% operating margin loss and remained unprofitable until 2022. However, this changed in FY 2023 when it finally broke even and delivered a 5.2% profit margin for the year. It is now the third largest cloud computing vendor, owning 11% of the global market share.
While it is still a distant third behind Amazon and Microsoft, cloud computing is a rapidly growing market that has more than tripled in revenue since 2016, and considering that Google Cloud’s profit margins are continually improving, this might be the new growth engine for Alphabet’s next decade.
Visa (V)
Compared to the rest of the S&P 500 companies, Visa (NYSE:V) has not had the best year so far. The stock is up by only 2%, and the fintech giant also missed the earnings for the second quarter. However, considering Visa’s relative underperformance in the first half of 2024 yet still a solid market position and profitable business model, this makes a good buying case for long term investors.
Visa’s business model has proven to bring success. With 4.4 billion Visa cards circulating in over 200 countries, Visa has been dominating the payments industry for decades. As the largest payment processor in the world, Visa makes money on data process, service and transaction fees. Last year, Visa was responsible for 283.2 billion transactions valued at more than $15 trillion. The fees are only going to go up from now as the world shifts towards online payments, meaning higher profit for Visa.
Walmart (WMT)
The last stock on this list is Walmart (NYSE:WMT). It is the largest retailer in the world and has over 10,500 stores and clubs. Its business model is simple yet extremely effective: offer a broad selection of everyday consumer items at affordable prices and sell as many as possible.
The stock is up already over 30% this year, and its sales are just simply impressive. However, the most impressive figures come from its eCommerce sales. It is up 20% from the previous year, and while it still falls short compared to other eCommerce specialists, it certainly means a positive sign to investors that Walmart is growing its online platform presence.
Earlier this year, Walmart went through a 3-for-1 stock split, making it an affordable stock priced under $100. If anyone, Walmart will be the first retailer to join the trillion dollar club. Investors should buy Walmart stock before it becomes expensive.
On the date of publication, Andy Kim did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.