CNN published an article in mid-June about the Magnificent 7 stocks. It pointed out that the seven stocks generated an average return in 2023 of 75.7%, about 3.1 times greater than the S&P 500.
As of this writing, the Magnificent 7 had a year-to-date return of 43%, more than double the index at 19.5%.
Despite the great run over the past 18 months, NYU Stern School of Business professor Aswath Damodaran told CNBC he believes that the seven stocks could be the “value stocks” of the market.
“We look at the last year and a half, they’ve added $8.8 trillion in market cap… just these seven companies. Just to give you perspective, the second-largest market in the world, China, has a market cap of $12.1 trillion. These seven stocks alone have added more in market cap than the entire German market, the French market, the Swiss market.”
As the professor said, all seven of these companies are money machines. Here are the three I would focus on.
Apple (AAPL)
Apple (NASDAQ:AAPL) was the worst-performing of The Magnificent 7 stocks in 2023, up 48%. So far this year it’s up 19%.
Apple stock is on the move as we head into the dog days of summer, hitting record highs on July 15. Morgan Stanley named it one of its top picks because of the launch of its artificial intelligence platform and the anticipated bump in sales for iPhones, the company’s biggest revenue generator. As Bloomberg reported:
“Analyst Erik Woodring boosted his price target on the tech giant’s shares to US$273, the third-highest among analysts tracked by Bloomberg, saying Apple Intelligence has potential to drive a record number of device upgrades. The feature is a ‘clear catalyst’ for a multi-year upgrade cycle, he wrote in a note Monday.”
Another upgrade came from Loop Capital, which raised its target price 76% on July 15 to $300. Not surprisingly, it changed its rating on the stock to “buy” from “hold,” suggesting that it will become a leader in generative AI.
Apple continues to do what it needs to stay relevant to consumers. Few of the Magnificent 7 can compare on this front.
Nvidia (NVDA)
Nvidia (NASDAQ:NVDA) was the best-performing of The Magnificent 7 stocks in 2023, up 239%. YTD, it’s up over 155%.
Although I’m not a techie, I’ve been a big supporter of Nvidia stock for some time. In November 2018, I said that Nvidia’s stock would hit $350 within 18 months. It didn’t quite make it there by May 2020. Today, it’s trading at a pre-stock-split price of $1,800 – 4-for-1 split in July 2020 and 10-for-1 in June 2024 – an indication that my instincts were right despite the timing being off.
At the time of my article, GPUs (graphics processing units) were all the rage, with AI and CPUs flying well under the radar. Now, of course, AI is arguably one of the biggest secular tech trends ever.
Goldman Sachs analyst Toshiya Hari recently suggested that it is the “industry de facto standard” for AI and should remain so for some time to come.
I still believe that as long as CEO and co-founder Jensen Huang is at the helm, the stock is a must-own tech stock.
Roundhill Magnificent 7 ETF (MAGS)
I realize that the Roundhill Magnificent 7 ETF (NASDAQ:MAGS) isn’t one of the seven Magnificent 7 stocks, but I couldn’t resist. Launched in April 2023, the actively managed ETF gained 38% so far this year.
Although active, it’s really “passively active” because the seven holdings are equally weighted and rebalanced every quarter. So, each of the seven starts a new quarter after the rebalance around 14.3%.
Why pay a management fee for that?
Well, first of all, even though there are only seven stocks, it still takes time and effort. Secondly, at 0.29%, a $10,000 investment at launch will have cost you $34 in fees in the 14 months since. You’ve gained about $8,200 over the same period, more than enough to cover your fees.
Normally, I’m not a fan of ETFs that are too narrowly focused such as single-stock funds. However, MAGS seems like the perfect example of what ETFs are meant to do – to more easily capture specific exposure to a set of stocks.
On the date of publication, Will Ashworth 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 held a LONG position in AAPL and NVDA.