Obviously, it's been a tough start to the year for the stock market. As of this writing, the S&P 500, Nasdaq Composite, and Dow Jones Industrial Average are down 10%, 16%, and 7%, respectively, year to date.
Nevertheless, there are stocks that have bucked this trend. So, let's examine three stocks with positive year-to-date returns, as selected by a panel of Motley Fool contributors: Palantir Technologies (NASDAQ: PLTR), T-Mobile US(NASDAQ: TMUS), and CrowdStrikeHoldings(NASDAQ: CRWD).
Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »
Image source: Getty Images.
Palantir's customers range from defense organizations to fast-food chains
Jake Lerch (Palantir Technologies): My choice is Palantir Technologies (NASDAQ: PLTR).
As of this writing, Palantir stock is up around 23% year to date. That makes it one of the top-performing stocks in the S&P 500. Indeed, only a handful of other stocks within the index have outperformed Palantir.
So, clearly, Palantir is demonstrating excellent relative strength in an otherwise lackluster market. But is this performance warranted, given the concerns swirling around the stock market?
Well, let's take those in turn.
The foremost concern in the market is that the Trump administration's tariff policy could lead to higher inflation, reduced consumption, and perhaps even a recession.
A recession -- or even just slower economic growth -- could lead to lower corporate earnings, which, in turn, could bring down stock prices. So, while Palantir isn't necessarily an apparent victim of the tariff uncertainty, it could still be affected.
The second major concern hanging over the stock market is that other countries may ratchet up retaliatory measures. Those efforts could target tech companies, as the tech sector is America's largest industry. That could put Palantir in the crosshairs.
Yet, we also must examine the bullish case for Palantir.
While trade uncertainty remains a dominant problem for the stock market in the short term, it may not prove to be a long-term issue. What is, however, is the growth of artificial intelligence (AI) systems. And on that front, Palantir remains a leader.
The company has developed AI-powered platforms that can aid organizations ranging from NATO to Wendy's. Its software can do everything from assisting soldiers on the battlefield to helping ensure there are always enough fries and ketchup.
AI platforms will increasingly be essential to every organization -- in much the same way personal computers are a mainstay of business. Palantir has an early lead in the race to develop the best platform and deploy it to paying customers. That's why the stock has outperformed so far this year, and it's why investors may want to consider it as a long-term holding.
Nothing seems to stop the growth of this telco
Will Healy(T-Mobile): Of the three major telecom companies in the U.S., T-Mobile holds a distinct advantage: It is the only major telco that started as a wireless business.
Thus, T-Mobile is not burdened with the dividend or legacy costs related to past landline businesses. Moreover, its focus on the U.S. likely insulates it from the tariff worries that have hit other Nasdaq-100 stocks.
Furthermore, it used that advantage to offer lower-cost service, helping it win business from Verizon Communications (NYSE: VZ) and AT&T (NYSE: T) by offering lower-cost service. It also bought smaller rivals, one of which may help it to compete for the business of customers who once preferred T-Mobile's rivals.
The 2020 acquisition of Sprint included billions in wireless spectrum, which is a sort of RF real estate that allows T-Mobile the use of premium frequencies in specified geographic areas. That and its massive investments in network improvements have helped it improve the quality of its service.
As a result, it reported 6.1 million postpaid net customer additions in 2024, the best in the industry. With that, it is now close to its rivals in terms of market share.
Image source: Statista.
That's not the case with total returns, where T-Mobile is the clear leader. Over the last five years, T-Mobile stock delivered total returns of nearly 195%. In contrast, AT&T offered total returns of around 71%, while Verizon's total returns are barely positive during that period.
Indeed, investors will have to pay a premium for these returns. T-Mobile sells at a P/E ratio of 27, far above AT&T at 18 times earnings, and Verizon at an 11 P/E ratio.
Still, AT&T's missteps forced it to cut its dividend in 2022, and both AT&T and Verizon have to contend with massive debts amid the competition to stay on top, and that could threaten the payouts of both of these companies.
Considering T-Mobile's stronger market position, it should continue to deliver positive long-term returns for its shareholders.
CrowdStrike sells mission-critical software and has a strong domestic customer base
Justin Pope (CrowdStrike Holdings): Most technology stocks in the S&P 500 are down this year, but CrowdStrike Holdings has gained over 10% since January. When you peel back some of the layers, it becomes clear why that is.
CrowdStrike is a cybersecurity standout. Its Falcon platform is cloud-based and utilizes AI to help identify potential threats on any device that connects to it. The Falcon platform's user-friendly experience and expanding capabilities have earned it industry accolades, helping CrowdStrike grow to approximately $4 billion in profitable annual revenue.
So, why has the stock held up so well? It could boil down to two factors.
First, cybersecurity is mission-critical to most of CrowdStrike's customers. IBM estimates that the average breach can cost a company $4.88 million. The potential damage breaches can cause is a significant incentive to invest in high-quality security. Second, CrowdStrike may feel a limited impact from tariffs. It is unclear whether tariffs will impact international trade, or to what extent. However, CrowdStrike generated approximately 70% of its sales in the United States last year. Furthermore, the Asia Pacific region was only 10%. If tensions between the U.S. and China escalate, it would likely have a limited impact on CrowdStrike's business.
CrowdStrike's valuation isn't cheap -- the stock trades at over 100 times this year's earnings estimates. However, the business should grow into its price tag over time. Sales grew by 25% year over year in the last quarter, and analysts estimate earnings will increase by an average of over 21% annually over the next three to five years.
The stock's resiliency is a reflection of the fantastic business it represents. CrowdStrike isn't a table-pounding buy yet, but investors can consider buying gradually over time and lean into any declines as a buying opportunity for this top-notch growth stock.
Should you invest $1,000 in Palantir Technologies right now?
Before you buy stock in Palantir Technologies, 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 Palantir Technologies 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 $524,747!* Or when Nvidiamade this list on April 15, 2005... if you invested $1,000 at the time of our recommendation,you’d have $622,041!*
Now, it’s worth notingStock Advisor’s total average return is792% — a market-crushing outperformance compared to153%for the S&P 500. Don’t miss out on the latest top 10 list, available when you joinStock Advisor.
Jake Lerch has positions in AT&T, CrowdStrike, and International Business Machines. Justin Pope has no position in any of the stocks mentioned. Will Healy has positions in CrowdStrike. The Motley Fool has positions in and recommends CrowdStrike, International Business Machines, and Palantir Technologies. The Motley Fool recommends T-Mobile US and Verizon Communications. The Motley Fool has a disclosure policy.
