Letting your winners run is a proven strategy on Wall Street, but one that’s hard to pull off. The temptation to take profits by removing your original investment becomes too great — but doing that greatly diminishes your returns.
Microsoft (NASDAQ:MSFT) began its run toward being the most valuable company in the world when the pandemic struck in March 2020, back when it was worth about $1 trillion. A $10,000 investment in the software giant would have grown to almost $25,000 at its peak valuation in late 2021. Had you sold your stake then, you would have missed a $1 trillion slide in value throughout 2022. But you would also have missed out on Microsoft’s turnaround to its current level where your original $10,000 would be worth $31,000 today for a total return of 209%.
As investors rarely time the exact bottom or top of a stock, your returns would likely be significantly lower. Just holding your stock and allowing the time and compounding to work for you, you can achieve phenomenal portfolio returns.
The three stocks hitting 52-week highs featured below are enjoying a terrific runup in value. They are also stocks with plenty of room to run even higher.
Advanced Micro Devices (AMD)
Chipmaker Advanced Micro Devices (NASDAQ:AMD) began surging five years ago and has returned over 2,130% for investors — compare that to a mere doubling in value by the S&P 500. Even though its stock suffered through the tech wreck of 2022 like Microsoft, it rebounded sharply and has more than tripled in value since. The semiconductor stock shows no sign of letting up.
The artificial intelligence boom is pushing AMD stock higher. Although Nvidia (NASDAQ:NVDA) is by far the leader in the AI chip space, AMD is making a stand. It introduced a new, lower-cost AI chip for data centers. While that might not unseat its rival from the throne, it will regardless generate a lot of business for the company. The AI market is new and so vast that several stocks can return profits if they stay the course.
Microsoft, Meta Platforms (NASDAQ:META), Broadcom (NASDAQ:AVGO) and others are all using AMD’s Instinct MI300X accelerators to power their cloud platforms and bolster their enterprise AI infrastructure. There is much more room to run higher and investors should not waver.
Amazon (AMZN)
Amazon (NASDAQ:AMZN) hasn’t had the same rocket shot trajectory as AMD, but it also crashed through its all-time high ceiling. Despite ongoing fear of a slowing business holding its shares back, AMZN stock has a $1.8 trillion market valuation today. Amazon is up 17% in 2024 and 90% higher over the last 12 months.
What investors need to focus on is the growing musculature of its advertising operations. Ad revenue surged 27% in the fourth quarter to $14.6 billion and $47 billion for the full year. Amazon’s ad business is growing far faster than either Alphabet‘s (NASDAQ:GOOG, NASDAQ:GOOGL) Google or Meta, albeit from a smaller base.
With AI also assuming a leading role in e-commerce, the cloud, and now advertising, Amazon should surge even higher in the future.
Citigroup (C)
Banking giant Citigroup (NYSE:C) had a far less illustrious run compared to AMD and Amazon, but the financial leader is still trading above its 52-week high. It is also 52% above the low point it hit last October.
Citi essentially has two businesses. Domestically, it does personal banking, wealth management and credit cards. It tends to be the weakest link for the bank. While internationally, Citi has commercial banking operations, including investment banking, corporate banking and trading.
The financial firm is still in the midst of a turnaround but is making its operations simpler and more focused. Not only should it improve the business but the changes will make it easier to understand.
For example, Citi is selling 14 global retail businesses and sold the Indonesian unit last November. It is also operating under consent orders from regulators regarding risk and oversight. In February, Citi was notified it needed to take more corrective actions as its existing responses were “lacking.” It’s part of a larger overhaul CEO Jane Fraser is undertaking.
While Citibank is the riskiest of the three stocks, occasional hiccups can be expected of large institutions. As the bank narrows its base of operations, C stock should soar as it puts these issues behind it.
On the date of publication, Rich Duprey did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
