The turning point we've all been waiting for has arrived: the new bull market. It's actually been around for the past 15 months, as the S&P 500 roared higher from its bear market low, but we can only confirm this phase of market optimism once an index has reached a new high. That happened this month, offering investors a great way to start the new year.
Now you might be wondering how long this new bull market will last and whether you still have time to benefit. And here I've got even more great news. History shows that bull markets have lasted significantly longer than bear markets -- almost 9 years versus 1.4, according to data compiled by Raymond James & Associates. This means you're not too late to this investing party, and there's plenty of time to join in on the bull market momentum. To get started, here are three top stocks to buy like there's no tomorrow.
Image source: Getty Images.
1. Apple
Apple(NASDAQ: AAPL) has demonstrated its strength over time, growing earnings and key metrics like free cash flow and return on invested capital (ROIC). The gains in ROIC in particular show the company knows how to deploy its cash wisely, and this is one reason to be optimistic about the future.
AAPL Return on Invested Capital data by YCharts.
Another reason to love this top consumer-goods player is for its moat, or competitive advantage, and that's its brand strength. Apple fans keep coming back to products like the iPhone and Apple Watch regardless of the price or the time they may have to wait for the launch of the latest version.
And on top of this, the market giant continues to grow its audience. In the most recent quarter, half of iPad and Mac buyers were new to those products. This brand strength means we should be confident about Apple's ability to deliver revenue growth over time.
Finally, this huge installed base of devices, topping two billion, opens the door for services-revenue growth as users sign up for digital content and other features. Services revenue has reached records in recent quarters and is higher margin than product revenue.
All of this shows Apple remains a monster growth stock that could lead gains in this bull market.
2. Tesla
For the first time, the best-selling vehicle in the world is an electric vehicle (EV) -- and it's a Tesla (NASDAQ: TSLA) Model Y. The EV giant delivered more than 1.2 million of the model last year, showing its own strength and the strength of EVs in general.
But let's focus on Tesla in particular right here. Yes, the company faces competition, and it has lowered prices and seen a considerable drop in operating margin -- to 8.2% in the fourth quarter from more than 16% in the year earlier period. Still, Tesla is at an important transition point, shifting its focus to lowering its costs to produce its cars and prioritizing volume and innovation. And this has helped it deliver solid results in recent times.
For instance, in the quarter, free cash flow soared 45% to more than $2 billion, and the company's cash level increased 31% to more than $29 billion. And cost of goods sold has declined to almost $36,000 per vehicle from nearly $40,000 in the same quarter a year ago.
This means the company has what it takes financially to deliver on its promises of innovation, such as advancing self-driving technology. Most recently, Tesla rolled out a beta version of a system using artificial intelligence (AI) to direct vehicle controls, such as the steering wheel or pedals.
Tesla shares declined in January, offering investors a great opportunity to get in on this top bull market -- and long-term -- buy.
3. Nvidia
AI is set to revolutionize the world, and Nvidia(NASDAQ: NVDA) is playing a crucial role in this potential revolution. The company's graphics processing units (GPUs), thanks to their incredible speed, power the training or the "deep learning" of AI tools so that they can deliver answers to complex questions and complete complicated tasks.
Today, Nvidia holds more than 80% share of this market, and though it faces competition, it's likely this chip giant will stay ahead of the game -- for a couple of reasons. First, the pattern we've seen in the central processing unit (CPU) market shows that, over time, rivals have been unable to oust Intel from the top spot. So, clearly, when dealing with processing power, an early market leader with a strong product has an advantage.
Second, Nvidia invests heavily in research and development to maintain this lead. In the most recent quarter, Nvidia's R&D spending climbed more than 18% to $2.2 billion. Thanks to solid earnings growth, Nvidia can afford to make these investments.
Finally, Nvidia doesn't depend on just one industry or one specialty. Nvidia's GPUs are still a top choice for gaming applications and graphics, and the company's AI chip uses span a broad range of industries from computing to healthcare.
Nvidia shares surged last year, but this AI leader has plenty of room to run and could lead this bull market higher.
Should you invest $1,000 in Apple right now?
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Adria Cimino has positions in Tesla. The Motley Fool has positions in and recommends Apple, Nvidia, and Tesla. The Motley Fool recommends Intel and recommends the following options: long January 2023 $57.50 calls on Intel, long January 2025 $45 calls on Intel, and short February 2024 $47 calls on Intel. The Motley Fool has a disclosure policy.
