Despite the recent market turbulence among US stocks, there are still plenty of businesses that have delivered stellar returns over the last 12 months.
The S&P 500’s up by just shy of 13%. Yet that doesn’t even come close to the double- and even triple-digit returns of some American growth shares. In fact, across the New York Stock Exchange and Nasdaq, the five top performers have generated an average gain of 100%!
America’s top five performers
Starting from the best, the US stocks that have delivered the highest share price returns over the last 12 months are:
- Palantir Technologies (NASDAQ:PLTR), +235%
- Alibaba Group, +88%
- T-Mobile US, +61%
- Philip Moris International, +60%
- AT&T Inc, +57%
It’s interesting to see two telecommunications firms (T-Mobile and AT&T) make it into the top five. Looking at the Nasdaq Telecommunications Index, this sector hasn’t been a particularly great place to invest in over the last couple of years. But smart investors focused on the long term have managed to snap up seemingly winning businesses and ride the tailwinds of an industry recovery.
However, Palantir Technologies is the standout performer by far. Even after losing a third of its market-cap since mid-February, the stock’s still more than tripled investors’ money since last March. So what’s behind this stellar performance?
The rise of Palantir
Palantir’s been receiving a lot of attention lately as an AI stock pick. The firm’s Artificial Intelligence Platform enables businesses to integrate AI into core analytical operations rather than being part of the sideshow. The result is higher quality analysis, leading to better data-driven decision-making. And customers are seemingly loving this functionality when looking at Palantir’s financial results.
Its latest quarterly earnings saw revenues surge 36%, with expectations of similar growth for the first quarter of 2025. What’s more, since Palantir is profitable – a rare trait for US tech stocks – underlying margins sit near 17%, enabling a good chunk of this top-line income to flow to the bottom line.
With this performance in mind and the general hype surrounding AI investments in recent months, it’s not so surprising to see the stock price climb higher. However, a 235% gain in the space of 12 months suggests there are a lot of growth expectations baked into Palantir’s valuation. And that’s made perfectly clear when looking at the forward price-to-earnings ratio which currently sits at a massive 147!
As such, even after all the recent volatility, Palantir continues to trade at lofty multiples that could send shares plummeting if it fails to keep up with expectations. That’s not a risk I’m willing to take with my portfolio so, despite the potential, Palantir’s not a stock I’m rushing to buy right now.
As for the other US stocks on this list, investors need to dig a bit deeper to determine what’s driving their valuation and whether there’s more room for growth.
This post was originally published on Motley Fool
