The jury’s in, and the verdict is a resounding yes to interest rate cuts by the Federal Reserve this year. Following the announcement on Wednesday, all three major indexes rallied to record highs, with the S&P 500 blowing past the 5,200 level for the first time. Hence, it is perhaps an ideal time to bet on the best S&P 500 stocks.
The Fed left rates unchanged but will cut them at least three times before the end of the year. Investors will breathe a sigh of relief, considering how the recent surge in inflation readings would’ve resulted in fewer rate cuts than expected. With that said, the stock market is expected to continue booming, offering an incredible wealth-building opportunity for investors now. Here are three S&P 500 stocks that stand out, in my opinion.
Amazon (AMZN)
Amazon (NASDAQ:AMZN) has been a growth stock for ages. Its ability to evolve with the rapidly expanding tech space continues to amaze us. During the peak of the ChatGPT explosion, I felt Amazon would play second fiddle to other tech giants, at least in the AI realm. However, it has completely shattered my reservations with a multi-faceted AI strategy that’s second to none.
It is entering the generative AI space with its investments in Claude-owner Anthropic. Claude AI is being dubbed as one of the most powerful chatbots in the market, rivaling ChatGPT across key benchmarks. Also, it’s expanding into the AI chip scene, and Trainium and Inferium are positioning it as potential in the sector. CEO Andy Jassy said AI could bring forth ‘tens of billions of dollars’ in sales over the next few years.
Furthermore, its powerful cloud computing arm in AWS provides a robust infrastructure to scale and meet AI demands effortlessly. Integrating both technologies enhances AI’s computational abilities while leveraging AWS’s massive data storage and processing capabilities.
Johnson & Johnson (JNJ)
Following the divestment of its consumer products arm, the new-look Johnson & Johnson (NYSE:JNJ) deserves attention. The pharmaceutical giant spun off its consumer products division in Kenvue to focus on more lucrative sectors, including medical devices and pharmaceuticals.
Following its strategic recalibration, the company posted encouraging results in its fourth quarter (Q4). Q4 revenues shot up to $21.4 billion due to strong showings in its pharma and MedTech segments. Sales beat estimates by $378 million, while its EPS of $2.29 bested estimates by a cent. As we advance, its management expects to continue growing its top line in the 5% to 7% range from 2025 to 2030.
Furthermore, it has plenty of liquidity to continue rewarding its shareholders, with almost $23 billion in cash and short-term investments. With an excellent 3% yield, it has grown its dividend payouts for 61 consecutive years. Also, it trades at an attractive 14.60 times forward earnings, 28% lower than the sector median.
Coca-Cola (KO)
Beverage giant Coca-Cola (NYSE:KO) is a cultural phenomenon that has been a household name for over a century. Though it’s known mainly for its popular soft drink, ‘Coke,’ it has diversified into various other beverages to grow its revenue base. It boasts more than a 45% market share in the global non-alcoholic beverages market, establishing it as a juggernaut in the niche.
Despite the inflationary pressures last year, it came through with flying colors, delivering solid top-and-bottom-line beats across both lines. Its Q4 report showed organic sales up 12% compared to the 8.8% consensus estimate. Additionally, as we look ahead, the company’s full-year adjusted organic sales growth is estimated to fall in the 6% to 7% range compared to the 6% consensus. Moreover, its dividend remains unshaken. Recently, it raised its payout by 5.4%, cementing its position as a Dividend King.
On the date of publication, Muslim Farooque 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.
