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Yahoo
3 hours ago
- Business
- Yahoo
The Trade Desk Stock Soars on Inclusion in S&P 500. History Says This Will Happen Next.
Key Points The Trade Desk stock advanced more than 7% on news that it would be added to the S&P 500 on July 18. During the last decade, stocks have returned an average of 13.6% following their addition to the S&P 500. The Trade Desk was recently ranked as a leader in ad tech software due to consistent growth and innovation. These 10 stocks could mint the next wave of millionaires › Shares of The Trade Desk (NASDAQ: TTD) have advanced more than 7% this week due to news of its inclusion in the S&P 500 (SNPINDEX: ^GSPC). The digital advertising company will be officially added to the popular index on July 18. It will replace Ansys, which was acquired by Synopsys. Importantly, The Trade Desk has been a phenomenal long-term investment. The stock is up 760% in the last seven years, and history says it could climb even higher in the near term after its addition to the S&P 500. Here's what investors should know. Historically, stocks tend to increase following their inclusion in the S&P 500 In total, about 175 companies were added to the S&P 500 over the last decade, meaning a little more than a third of the index was replaced during that time. Those stocks returned an average of 13.6% in the 12-month period following their inclusion. Put differently, history says The Trade Desk stock will advance about 14% in the next 12 months. Readers may be wondering why stocks tend to increase following their inclusion in the S&P 500. The answer lies in the many investment products linked to the index. Any fund tracking the S&P 500 has to buy stock in The Trade Desk to ensure its composition matches that of the benchmark index. That buying activity puts upward pressure on the share price, at least temporarily. "Inclusion in the U.S. equity benchmark can elevate a company's profile and is becoming more important as passive investment funds grow," according to Bloomberg. But tailwinds arising from a company's addition to the S&P 500 are short lived. So, investors should ask themselves if The Trade Desk is a smart long-term investment before purchasing shares. The Trade Desk is a recognized leader in ad tech software The Trade Desk is the largest independent demand-side platform (DSP) in the ad tech industry. Its software leans on artificial intelligence (AI) to help agencies and brands plan, measure, and optimize campaigns across digital channels. Importantly, the company is the dominant DSP in connected TV advertising where it sources inventory from Walt Disney, Netflix, and Roku. The Trade Desk's independence means it does not own media content or ad inventory, so it has no reason to steer customers toward specific web properties. That eliminates conflicts of interest inherent to competitors like Alphabet and Meta Platforms, which have a clear incentive to sell their own ad inventory. Portfolio managers at The Ithaka Group recently described the company's competitive moat as stemming from its "industry-leading technology stack, its trusted brand due to its singular focus on the buy-side of the ad ecosystem (no conflicts of interest), and its transparent reporting that details the ROI on each ad dollar spent." Indeed, Frost & Sullivan analysts recently ranked The Trade Desk as the leading DSP based on growth and innovation. In particular, the report mentioned sophisticated AI tools added during the most recent upgrade, which help media buyers optimize ad campaign performance through AI-powered budgeting, bidding, and targeting. Wall Street estimates The Trade Desk's adjusted earnings will grow at 12% annually through 2026. That makes the current valuation of 47 times adjusted earnings look expensive. But I think analysts are mistaken. Ad tech spending is projected to grow at 14% annually through 2030, and The Trade Desk has consistently gained market share. If that continues, earnings will likely grow more quickly. Additionally, Wall Street has consistently underestimated The Trade Desk in the past. The company beat the consensus earnings estimate by an average of 12% during the last six quarters. If that continues, the current valuation would look more reasonable in hindsight. Patient investors should feel comfortable buying a small position today. Don't miss this second chance at a potentially lucrative opportunity Ever feel like you missed the boat in buying the most successful stocks? Then you'll want to hear this. On rare occasions, our expert team of analysts issues a 'Double Down' stock recommendation for companies that they think are about to pop. If you're worried you've already missed your chance to invest, now is the best time to buy before it's too late. And the numbers speak for themselves: Nvidia: if you invested $1,000 when we doubled down in 2009, you'd have $442,699!* Apple: if you invested $1,000 when we doubled down in 2008, you'd have $39,697!* Netflix: if you invested $1,000 when we doubled down in 2004, you'd have $679,653!* Right now, we're issuing 'Double Down' alerts for three incredible companies, available when you join , and there may not be another chance like this anytime soon.*Stock Advisor returns as of July 14, 2025 Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Trevor Jennewine has positions in Roku and The Trade Desk. The Motley Fool has positions in and recommends Alphabet, Meta Platforms, Netflix, Roku, Synopsys, The Trade Desk, and Walt Disney. The Motley Fool has a disclosure policy. The Trade Desk Stock Soars on Inclusion in S&P 500. History Says This Will Happen Next. was originally published by The Motley Fool Sign in to access your portfolio
USA Today
3 days ago
- Business
- USA Today
Why the stock market rally may mislead investors in 2025
Investors have gotten good news lately. The U.S. stock market reacted positively to a stable unemployment rate of 4.1 % in June 2025, which was lower than the expected 4.3%. A dip in the Consumer Price Index (a metric used to gauge inflation) from 3.3% in May 2024 to 2.4% in May 2025 helped alleviate concerns about inflation. The Federal Reserve held its benchmark interest rates steady between 4.25% and 4.50% in June 2025, while the next rate cut is likely scheduled for September 2025. Against the backdrop of encouraging economic numbers and reduced concerns about tariff wars, the benchmark S&P 500 (SNPINDEX: ^GSPC) index hit record highs. Despite the current market optimism, picking stocks based solely on a few economic metrics can be risky. Instead, investors should consider data across various aspects of the economy — such as employment, inflation and production — and make sure they aren't missing the bigger picture. Economic metrics can be deceptive Consider the employment rate in June 2025. Although it appears healthy, the economy is currently facing critical problems, including a decline in overall labor force participation and slower job creation. The labor force participation rate has fallen to 62.3%, the lowest it has been since late 2022. Private sector nonfarm payrolls increased by only 147,000 jobs in June 2025, far lower than the 180,000 to 200,000 jobs per month estimated to be required to maintain growth in the working-age population. While inflation appears to be under control based on headline CPI numbers, the core CPI (excluding food and energy) rose 2.9% for the 12 months ending in May 2025. Inflation persists in areas such as insurance, medical services and housing. Industrial production numbers are also mixed. While manufacturing grew 4.8% in the first quarter of 2025, manufacturing production declined by almost 0.5% in April, primarily due to a decline in motor vehicle output. Manufacturing output rose just 0.1% in May 2025, as an increase in motor vehicle and aircraft output was offset by weakness in other areas. So, does the economy seem strong enough to match the market exuberance? I don't think so. Analyzing historical case studies To demonstrate how relying on lagging indicators alone can prove problematic for investors' portfolios, we can analyze two specific case studies. In June 2020, a record jobs report showed that 4.8 million nonfarm payroll jobs were added and unemployment had dropped to 11.1% from the expected 12.4%, sending the markets soaring. Investors were optimistic, anticipating a strong rebound in the coming months following the pandemic-related lockdowns. However, the market exuberance was short-lived, as megacap tech stocks primarily experienced a dramatic decline in September 2020. Wall Street had overlooked the acceleration of COVID-19 cases in certain key states and low overall consumer confidence. The jobs report was also based on data collected during the initial reopenings, which included the temporary rehiring of workers and did not account for job suspensions and rollbacks in regions experiencing a resurgence in COVID-19 cases. The challenging macroeconomic conditions raised concerns about the tech stock valuations being too high. Then, in March 2023 markets surged due to cooler-than-anticipated inflation numbers and increased expectations that the Federal Reserve would ease its aggressive interest rate hiking. This led to capital flowing into rate-sensitive sectors such as technology, consumer discretionary and communication services. However, while the headline CPI was cooling down, shelter costs increased month over month by 0.6% in March 2023. Although this was the smallest monthly gain since November 2022, it still resulted in an 8.2% year-over-year rise in shelter costs. Additionally, the March 2023 CPI reading of 5% was still 2.5 times the Federal Reserve's target of 2%. Hence, contrary to market expectations, the Federal Reserve delivered its 10th consecutive interest rate hike in May 2023, raising the benchmark rate to 5%-5.25%, the highest since August 2007. Not surprisingly, the very sectors that had benefited from the March rally, including housing stocks and fintech companies, suffered the most after the rate hikes were announced. These case studies highlight the importance of thoroughly examining lagging indicators to comprehend the investment landscape accurately. Stocks for the current cautious economic environment In this environment of a softening labor market, with declining job openings, reduced labor force participation and persistent uncertainty surrounding tariffs, it makes sense to take stakes in fundamentally strong companies with recurring revenue streams and high pricing power. Leading cloud and enterprise software player Microsoft (NASDAQ: MSFT) could prove to be a smart pick in periods of economic ambiguity thanks to its diversified business model, recurring revenue streams and strong balance sheet. The company plans to invest $80 billion in AI infrastructure and data centers in fiscal 2026 (ending June 30, 2026), aiming to capture a significant share of the AI market, which is estimated to be worth nearly $1.8 trillion by 2032. Microsoft's increasingly dominant AI ecosystem, which includes Azure AI services, Copilot virtual assistant integrated across its various software offerings, and AI-powered personal computers, is expected to be a significant growth catalyst even in a challenging market environment. Custom data center chip and advanced networking infrastructure provider Broadcom (NASDAQ: AVGO) is another stock that is benefiting dramatically from the ongoing AI infrastructure boom. The company's AI-related revenues surged 46% year over year to $4.4 billion in the second quarter of fiscal 2025 (ending May 4, 2025). Broadcom's AI networking business also grew over 170% year over year in the second quarter, capturing 40% of total AI revenue. Analysts expect the company's AI revenue to be $15 billion to $18 billion in fiscal 2025, driven by rising demand for large AI clusters from its existing three major hyperscaler clients, as well as the addition of new hyperscaler customers. Furthermore, Broadcom's $61 billion acquisition of VMware has also strengthened the company's position in the hybrid cloud and networking software space. Do your homework Relying on economic headlines for investment decisions can prove harmful in the long run. Instead, it makes sense to triangulate economic data and pick stocks that have low downside risk in the current environment. By avoiding potential traps, you can build a solid portfolio for long-term wealth generation. Manali Pradhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Microsoft. The Motley Fool recommends Broadcom and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy. The Motley Fool is a USA TODAY content partner offering financial news, analysis and commentary designed to help people take control of their financial lives. Its content is produced independently of USA TODAY. Should you invest $1,000 in Microsoft right now? Offer from the Motley Fool: Before you buy stock in Microsoft, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Microsoft wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider whenNetflixmade this list on December 17, 2004... if you invested $1,000 at the time of our recommendation,you'd have $671,477!* Or when Nvidiamade this list on April 15, 2005... if you invested $1,000 at the time of our recommendation,you'd have $1,010,880!* Now, it's worth notingStock Advisor's total average return is1,047% — a market-crushing outperformance compared to180%for the S&P 500. Don't miss out on the latest top 10 list, available when you joinStock Advisor. See the 10 stocks »
Yahoo
3 days ago
- Business
- Yahoo
Why Rocket Lab Stock Is Soaring to a New All-Time High Today
Rocket Lab has surged to a new all-time high today after Citi published bullish coverage on the stock. Citi raised its price target on Rocket Lab stock from $33 per share to $55 per share -- implying substantial upside even after today's gains. Rocket Lab's valuation run-up has made the stock riskier, but the company still has huge long-term growth potential. 10 stocks we like better than Rocket Lab › Rocket Lab (NASDAQ: RKLB) stock is seeing another day of big gains in Monday's trading. The company's share price was up 8.6% as of 1:30 p.m. ET. Meanwhile, the S&P 500 (SNPINDEX: ^GSPC) was up 0.1%, and the Nasdaq Composite (NASDAQINDEX: ^IXIC) was up 0.3%. The stock had been up as much as 9.9% earlier in the session. Rocket Lab is surging today after a major investment firm issued a major upward revision for its price target. The company's share price is now up roughly 66% year to date and is setting a new all-time high in today's trading. Citi published new coverage on Rocket Lab stock before the market opened this morning and maintained a buy rating on the stock. The investment firm also raised its one-year price target on the stock from $33 per share to $50 per share. Citi's analysts are seeing strong sales momentum in the broader aerospace and defense sector, and they expect Rocket Lab will be a strong beneficiary of the trend. The stock is also seeing bullish momentum in conjunction with investors betting that the Federal Reserve is now on track to serve up multiple cuts to the benchmark interest rate this year -- with a reduction for the base rate potentially arriving as early as this month. As of this writing, their new price target still suggests additional upside of 18%. Rocket Lab is seeing strong launch demand for commercial satellites for telecommunications and imaging, and it also has a long growth runway in the defense sector. The space industry appears to be taking off in a big way, which has helped support big gains in the company's valuation. Rocket Lab has a market capitalization of roughly $19.5 billion and is trading at approximately 34 times this year's expected sales. While that growth-dependent valuation profile comes with substantial risk, it's possible that the company is still in the early stages of a massive long-term expansion trajectory. Before you buy stock in Rocket Lab, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Rocket Lab wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $671,477!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,010,880!* Now, it's worth noting Stock Advisor's total average return is 1,047% — a market-crushing outperformance compared to 180% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of July 14, 2025 Citigroup is an advertising partner of Motley Fool Money. Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Rocket Lab. The Motley Fool has a disclosure policy. Why Rocket Lab Stock Is Soaring to a New All-Time High Today was originally published by The Motley Fool
Yahoo
4 days ago
- Business
- Yahoo
Is the Stock Market Overheating? How to Position Your Portfolio for What Comes Next
Investors should not panic and go to cash because stocks are at all-time highs. At the same time, do not use leverage to put your portfolio on margin. Remember to always consider valuation when investing. 10 stocks we like better than S&P 500 Index › The U.S. stock market has been highly resilient in the face of macroeconomic and tariff uncertainty in the last few years. Since the beginning of 2023, the S&P 500 index (SNPINDEX: ^GSPC) has posted close to a 70% total return, marking one of the best two-and-a-half-year periods in stock market history. Does that mean the market is overheating? The S&P 500 average price-to-earnings multiple is inching back close to all-time highs, putting large expectations on future growth for its underlying companies. As an investor, it can pay to have a level head and act rationally when the stock market is going on a roller-coaster ride (in either direction). Here are three things not to do with stocks at all-time highs to help you position your portfolio and succeed over the long term. A famous investing adage is, "you don't go broke taking a profit." While that is technically true, cutting short your returns on huge winning stocks can severely hamper your long-term returns, while also adding a large tax hit that is underappreciated by many stock investors. The huge winning returns in the market come from holding high-quality businesses such as Amazon, Netflix, or Nvidia for decades. If you bought and then sold them only after a double, you would be missing out on 100-fold returns. In other words, don't take your portfolio entirely to cash just because stocks are back at all-time highs. When looking at historical data, there is barely a difference between forward returns over one-, three-, and five-year periods when you buy the stock market at all-time highs compared to any other period. This is a quantitative example of why investors should not try to time the market. It is close to impossible, doesn't truly impact your long-term returns, adds new tax implications, and is much more stressful than buy-and-hold investing. That's not a winning formula for stock investing. Stay patient and let your winning stocks keep riding to new heights. Rising stocks can give you confidence. Sometimes, this can lead to irrational exuberance, and it is important to keep a level head even if you feel like a stock market genius right now. One thing to not do -- and perhaps the most important lesson all investors should take from reading this article -- is to avoid going on margin to buy more stocks. Trading on margin means getting a loan from your brokerage to buy more stocks. For example, you may have $100,00 in cash deposited in your account but take on $50,000 in loans to buy more from your brokerage. Margin debt for investors has hit a record high in 2025. You can look really smart buying on margin when stocks go up, but it can add stress and lead to disastrous results in times of market volatility. If stocks go down aggressively -- like they did in April during the tariff uncertainty -- your stock brokerage may issue a margin call, which requires you to deposit more cash into your account to cover losses on your loans. Or, if you cannot deposit cash, your broker has the right to take ownership of your stocks and sell off your positions, which can send your account to zero. You never want your account to go to zero; it is a disastrous situation that can eliminate years and years of returns. Avoid taking out margin loans to buy stocks, even if you feel like a genius with your portfolio soaring in the last few years. When a bear market occurs -- as it always inevitably does -- you may get liquidated by your brokerage. Stay stress-free and simply buy and hold stocks without taking on debt to do so. The last lesson for investors when investing at all-time highs is to pay attention to valuation when analyzing a stock. Ignoring valuation can be an easy thing to do when stocks seem to only go up, but it will matter eventually over the long term. For example, you could have a stock like Palantir Technologies. Shares are up over 2,000% since the start of 2023, making it one of the best-performing stocks over that time period. It was a fantastic investment if you bought a few years ago. But you shouldn't buy it today without looking at its valuation. A quick look shows that Palantir may be the most overvalued stock on the market right now. It has a price-to-sales (P/S) ratio of over 100, which is a recipe for terrible long-term returns for those who buy today. Ignoring valuation may lead you into dangerous territory to buy stocks such as Palantir. If you keep a level head and do not ignore valuation when deciding which stocks to buy, you can avoid buying these risky stocks for your portfolio. Don't hide in cash, don't trade with leverage, and don't ignore valuation. These are three lessons you can take to make smart, rational investing decisions with the stock market soaring. Before you buy stock in S&P 500 Index, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and S&P 500 Index wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $671,477!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,010,880!* Now, it's worth noting Stock Advisor's total average return is 1,047% — a market-crushing outperformance compared to 180% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of July 7, 2025 John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Brett Schafer has positions in Amazon. The Motley Fool has positions in and recommends Amazon, Netflix, Nvidia, and Palantir Technologies. The Motley Fool has a disclosure policy. Is the Stock Market Overheating? How to Position Your Portfolio for What Comes Next was originally published by The Motley Fool Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
6 days ago
- Business
- Yahoo
Is It Really Safe to Invest in the S&P 500 Right Now? Here's What History -- and Warren Buffett -- Have to Say
The market has been thriving in recent months, but the future is still uncertain. No matter what may be looming, the market's long-term future is bright. If you're nervous about investing, Warren Buffett can offer some reassuring advice. 10 stocks we like better than S&P 500 Index › This year has been a wild ride for the stock market. After sinking by nearly 20% between February and April, the S&P 500 (SNPINDEX: ^GSPC) has since soared by just around 26% from its low point -- officially reaching a new peak in July. However, the market can change on a dime, especially with a slew of new policies taking effect in Washington. So is it really safe to invest in the stock market? Here's what history suggests -- and what Warren Buffett has to say about times like these. The future may be uncertain, but that's never stopped the stock market from thriving over time. In the last 25 years alone, we've experienced multiple unprecedented events and record-breaking downturns. From wars and a global pandemic to the collapse of the tech industry and the Great Recession, the last couple of decades have been rough. Despite all the volatility, though, the S&P 500 has soared by a staggering 326% since 2000, as of this writing. In other words, you'd have more than quadrupled your money by investing in an S&P 500 index fund and simply holding it through all the market's ups and downs. While past performance doesn't predict future returns, it can be reassuring to know that the market has recovered from every single downturn it's ever faced -- without fail. No matter what may be coming, it's extremely likely to bounce back. The key, though, is to maintain a long-term outlook. It can take years for stocks to recover from a particularly nasty bear market or recession, but the longer you hold your investments, the less likely it is that you'll lose money. In fact, analysis from investing firm Capital Group found that, historically, there's a 33% chance the S&P 500 will earn negative returns over just one year. Over five years, that chance drops to 7%. And over the last 82 years, there's never been a 10-year period in which the index experienced negative total returns. In other words, if you were to invest in an S&P 500-tracking fund and hold it for a decade, it's extremely unlikely that you'll lose money -- no matter how volatile the market is in that period. In 2008, at the height of the financial crisis and the Great Recession, Warren Buffett wrote an opinion piece for The New York Times. In it, he offered some valuable lessons for investors on how to navigate downturns while still setting themselves up for long-term success. "A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful," he writes. "To be sure, investors are right to be wary of highly leveraged entities or businesses in weak competitive positions. But fears regarding the long-term prosperity of the nation's many sound companies make no sense." Now more than ever, it's crucial to ensure that you're only investing in quality companies with solid foundations. Weaker stocks can appear to thrive when the market is surging, but they'll have a tough time bouncing back from a downturn. Companies with competitive advantages over their peers, competent leadership teams, and healthy finances are far more likely to survive even the worst market slumps. Buffett also emphasized the importance of continuing to invest even when it's daunting. "You might think it would have been impossible for an investor to lose money during a century marked by such an extraordinary gain," he wrote. "But some investors did. The hapless ones bought stocks only when they felt comfort in doing so and then proceeded to sell when the headlines made them queasy." Since Buffett's article was published in October 2008, the S&P 500 has generated total returns of nearly 558%. Those who earned the most were the ones who stayed in the market even when it was tough. "I can't predict the short-term movements of the stock market. I haven't the faintest idea as to whether stocks will be higher or lower a month -- or a year -- from now," Buffett continued. "What is likely, however, is that the market will move higher, perhaps substantially so, well before either sentiment or the economy turns up. So if you wait for the robins, spring will be over." Nobody -- even Warren Buffett -- can say what the market will do later in 2025 and beyond. But by investing in quality stocks and staying in the market even when it's nerve-wracking, you can generate life-changing wealth no matter what may be on the horizon. Before you buy stock in S&P 500 Index, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and S&P 500 Index wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $671,477!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,010,880!* Now, it's worth noting Stock Advisor's total average return is 1,047% — a market-crushing outperformance compared to 180% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of July 7, 2025 Katie Brockman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Is It Really Safe to Invest in the S&P 500 Right Now? Here's What History -- and Warren Buffett -- Have to Say was originally published by The Motley Fool 登入存取你的投資組合
