The “Magnificent Seven” are some of the most dominant businesses in the world. As a result, the company’s stock, whose price has soared recently, is in many investors’ portfolios.
In the present circumstances Market capitalization 2.8 trillion dollars, apple (NASDAQ:AAPL) No introduction needed. Manufacturers of popular hardware and software products are economically profitable enterprises. And the company’s stock price has risen 316% in the past five years, Nasdaq Composite index.
Apple too berkshire hathaway‘s largest stock position to date.But is that the best? Magnificent Seven What stocks can I buy right now?
low growth, high prices
Apple doesn’t publish growth rates like it used to. Sales rose 2.1% in the first quarter of fiscal 2024, which ended Dec. 30, but declined in each of the previous four quarters. On average, Wall Street analysts expect sales to grow at an annual rate of 4.2% over the next three fiscal years.
That’s little reason to get excited. In fact, when compared to other Magnificent Seven companies, Apple ranks at the bottom. According to consensus analyst estimates, the sales of his remaining six companies are expected to increase significantly.
I blame it macro headwinds Or consumers no longer feel the need to frequently upgrade to the latest Apple devices. But investors would probably be wise not to expect double-digit revenue increases from him from Apple.
But the stock is trading as if strong growth is a foregone conclusion. The company’s price-to-earnings ratio (PER) of 28.2 times is quite high compared to the average of 21 times over the past 10 years. In my opinion, this is the best stock to keep on your watch list for now.
digital advertising giant
Of all the stocks in the Magnificent Seven, I think the two are the best to buy right now. I’m talking about the giants of the digital advertising market. alphabet (NASDAQ:Google) (NASDAQ:GOOG) and meta platform (NASDAQ:Meta).
Growth is not a concern for these Internet companies. Alphabet reported an 8.7% increase in 2023 sales to $307 billion, while Meta’s sales rose 15.7% to $135 billion. These two businesses will continue to benefit greatly as the global digital advertising industry is expected to expand for years to come. Together, they control almost 60% of the global digital advertising market.
We cannot ignore the fact that both Alphabet and Meta have strong competitive advantages. The most noteworthy point is that network effect. Alphabet’s Google Search and YouTube, like Meta’s various social media apps, are hugely popular internet services that get better with more information, content, and users. This situation is extremely difficult for smaller competitors.
Over the past five years, Alphabet and Meta’s average operating margins were 25.8% and 34.2%, respectively. Additionally, both generate a ridiculous amount of operational costs. Cash flowgiving us the financial resources to aggressively invest in our artificial intelligence capabilities, while also repurchasing many of our outstanding shares.
Investors are looking for a P/E ratio of just 20.3x for Alphabet and 24.1x for Meta. By that standard, these are the cheapest of the Magnificent Seven stocks, and in my opinion, an easy investment.
There’s no question that Apple is one of the highest quality companies in the world, but its current structure doesn’t put it in a good position to achieve long-term returns above the market. Based on attractive business characteristics and compelling valuations, Alphabet and Meta are the best Magnificent Seven stocks to buy now.
Should you invest $1,000 in Apple right now?
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Randi Zuckerberg is a former head of market development and spokesperson at Facebook, sister of Meta Platforms CEO Mark Zuckerberg, and a member of the Motley Fool’s board of directors. Alphabet executive Suzanne Frye is a member of The Motley Fool’s board of directors. Neil Patel and his clients have no positions in any stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Apple, Berkshire Hathaway, and Meta Platforms. The Motley Fool has a disclosure policy.
Is Apple the best ‘Magnificent Seven’ stock to buy now?Originally published by The Motley Fool
