While Vanguard index funds are really good core portfolio holdings, history shows that investors can make a lot more money over the long term with individual S&P 500 stocks. Over the last five years, for example, many stocks in this index have returned more than 30% a year on average versus roughly 12% annually for global ETFs.
Here, I’m going to highlight three S&P 500 shares that I believe will trounce global index funds over the next five years. Could they be worth considering to try and turbo charge an ISA or Self-Invested Personal Pension (SIPP)?
Marvell Technology
First up is leading chip company Marvell Technology (NASDAQ: MRVL). It specialises in custom AI chips, making products for the likes of Amazon and Microsoft. It also offers optical interconnects and networking solutions that move data quickly.
This company’s having a huge amount of success today amid the data centre buildout. Last quarter, its revenue jumped 28% year on year to $2.4bn. Looking ahead, analysts expect revenue for this financial year to hit $11.5bn. That would represent a 40% increase year on year.
Now of course, a slowdown in AI spending is a risk with Marvell. Today, it’s priced for strong growth in the years ahead but think it’s worth a look. It’s worth noting that Nvidia CEO Jensen Huang has said that he sees Marvell achieving a $1trn market one day, implying that it could grow more than five-fold from here.
Axon Enterprise
Next, we have Axon Enterprise (NASDAQ: AXON). It’s the number-one player in public security globally. Today, it offers a broad range of solutions designed to protect society including non-lethal weapons for law enforcement officers (Tasers), body cameras, and anti-drone systems. It also has AI-powered software.
In recent years, this company has grown at a prolific rate. Believe it or not, it has now registered 10 consecutive quarters of 30%+ revenue growth. For the most recent quarter, revenue was $904m, up 35% year on year. Net revenue retention reached 126%, showing that customers are spending more with the company.
Looking ahead, the company signalled that there’s plenty more growth to come, so I reckon the stock’s worth a look. Especially now that sentiment towards software companies is improving.
Again, it’s expensive, meaning that there’s not much room for a slowdown in growth. Taking a five-year view however, I’m expecting it to easily beat a global index fund.
Robinhood Markets
Finally, we have Robinhood Markets (NASDAQ: HOOD), a fast-growing investing platform operator.
Today, it has around 28m customers worldwide. Via its platform, customers are able to trade stocks, crypto, options, and prediction markets (depending on their location) as well as access services such as banking and wealth management.
Taking a five-year view here, I see a ton of potential. With its broad suite of products and insanely low fees, I expect it to capture market share from traditional brokers. I also expect it to see growth from international expansion (currently most of its revenues come from the US).
A downturn in the financial markets is a key risk with this stock, a scenario that could lead to a major slowdown in growth.
I expect it to be a much bigger company in five years’ time though. So it could be worth a closer look.
Should you invest £5,000 in Robinhood Markets right now?
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Edward Sheldon owns shares in Amazon, Microsoft, Axon Enterprise, Marvell Technology, Nvidia, and Robinhood Markets
