By Justin Carbonneau (Twitter | LinkedIn | YouTube) —
Looking at Amazon, Apple, Google (Alphabet), Meta, Microsoft, Nvidia and Tesla through the lens of the guru models on Validea.
What do you see when you look inside your portfolio so far this year? Do you have a broad, diverse set of winning positions or are most of your gains in just a few stocks. I’m guessing for most investors, it’s the latter, which paints a revealing picture of what has transpired in the market this year – a handful of ultra-large stocks, known as the “Magnificent Seven” – Amazon, Apple, Google (Alphabet), Meta, Microsoft, Nvidia and Tesla – have driven a substantial part of the overall gains.
Take the S&P 500 – it’s up over 15% for the year. In contrast, it’s equally weighted counterpart (the S&P 500 equally weighted index) has a gain of less than 2%. That’s a big disparity and a result of the Magnificent Seven carrying a much higher weighting in the S&P 500, a market cap weighted index, vs. the equally weighted S&P 500.
Many of these names are the most widely held stocks across individual investor and professional portfolios. Given the interest in these names, I thought it’d be interesting to see how these stocks stack up fundamentally through the lens of the fundamental models we run on Validea. Big doesn’t always mean better and so investors could be well-served by looking at things like quality, profitability, valuation, growth and earnings metrics to determine how to how these stack stack up now and their investment merits going forward.
Amazon (AMZN)
| AMAZON.COM, INC. (AMZN) | Positives | Negatives | Guru Rating (more gurus is better) | Overall Factor Grade* (lower is better) |
| Sales Growth, Reinvesting in the business and growth, Strong price momentum | Very expensive, not profitable | 88% from the P/B Investor Model | 70th Percentile | |
| Guru Analysis Link for AMZN: https://www.validea.com/guru-analysis/amzn Factor Report Link for AMZN: https://www.validea.com/factor-report/amzn | ||||
Apple (AAPL)
| APPLE INC (AAPL) | Positives | Negatives | Guru Rating (more gurus is better) | Overall Factor Grade* (lower is better) |
| High quality rating, Strong sales and EPS growth, good margins, strong price momentum | Trading at the higher end of historical valuation range | 80%+ from five models, including the Patient Investor (Buffett Model) | 24th Percentile | |
| Guru Analysis Link for AAPL: https://www.validea.com/guru-analysis/aapl Factor Report Link for AAPL: https://www.validea.com/factor-report/aapl | ||||
ALPHABET (GOOGL)
| ALPHABET / GOOGLE (GOOGL) | Positives | Negatives | Guru Rating (more gurus is better) | Overall Factor Grade* (lower is better) |
| High quality rating, Strong sales and EPS growth, High Institutional Ownership, Low Debt and Strong price & fundamental momentum | Trading at the higher end of historical valuation range, no Dividend Yield | 80%+ from six models, including the Patient Investor (Buffett Model) | 5th Percentile | |
| Guru Analysis Link for GOOGL: https://www.validea.com/guru-analysis/googl Factor Report Link for GOOGL: https://www.validea.com/factor-report/googl | ||||
META (META)
| META (META) | Positives | Negatives | Guru Rating (more gurus is better) | Overall Factor Grade* (lower is better) |
| High quality rating, Strong sales and EPS growth, High Institutional Ownership, Low Debt and Strong price & fundamental momentum | Trading at the higher end of historical valuation range, no Dividend Yield | 80%+ from three models, including the Patient Investor (Buffett Model) | 14th Percentile | |
| Guru Analysis Link for META: https://www.validea.com/guru-analysis/meta Factor Report Link for META: https://www.validea.com/factor-report/meta | ||||
MICROSOFT (MSFT)
| MICROSOFT CORP (MSFT) | Positives | Negatives | Guru Rating (more gurus is better) | Overall Factor Grade* (lower is better) |
| High quality rating, Strong sales and EPS growth, High Institutional Ownership, Low Debt and Strong price & fundamental momentum | Trading at the higher end of historical valuation range, no Dividend Yield | 80%+ from three models, including the Patient Investor (Buffett Model) | 8th Percentile | |
| Guru Analysis Link for MSFT: https://www.validea.com/guru-analysis/msft Factor Report Link for MSFT: https://www.validea.com/factor-report/msft | ||||
NVIDIA (NVDA)
| NVIDIA (NVDA) | Positives | Negatives | Guru Rating (more gurus is better) | Overall Factor Grade* (lower is better) |
| Upward earnings revisions, sales and earnings growth, strong momentum | Trading at lofty valuations, earnings not keeping up with sales. | 80%+ from two models, including Earnings Revision and Quantitative Momentum models | 50th Percentile | |
| Guru Analysis Link for NVDA: https://www.validea.com/guru-analysis/nvda Factor Report Link for NVDA: https://www.validea.com/factor-report/nvda | ||||
TESLA INC (TSLA)
| TESLA INC (TSLA) | Positives | Negatives | Guru Rating (more gurus is better) | Overall Factor Grade* (lower is better) |
| Strong long-term sales growth | Expensive, Not Profitable, Negative Shareholder yield. | 80%+ from one guru model | 56th Percentile | |
| Guru Analysis Link for TSLA: https://www.validea.com/guru-analysis/tsla Factor Report Link for TSLA: https://www.validea.com/factor-report/tsla | ||||
Be The Informed Investor
The “Magnificent Seven” undoubtedly wield tremendous influence over the markets, and their performance shapes the direction of indices such as the S&P 500. But as we’ve dissected each using Validea’s guru models, a mixed picture emerges. Some of them, like Google (Alphabet) and Apple, score remarkably well across multiple metrics, indicating not just market dominance but also fundamentally sound companies with attractive investment qualities.
However, others, like Tesla, while boasting impressive sales growth, carry certain concerns, like high valuations and profitability questions.
While their size and market influence are undeniable, investors have the ability to scan these stocks through tools like Validea’s models and factor report. Remember, in the ever-evolving world of investments, past performance is not always indicative of future results. So, whether you view these seven as fundamentally sound or fundamentally flawed, one thing is clear: keeping a keen eye on their metrics, trends, and potential pitfalls is important for any informed investor.
*The Overall Factor Grades are a derived from a composite score that takes all of these factors for a stock into consideration: Size, Value, Quality, Negative Quality, Momentum and Low Volatility.
