5 Most Profitable Stocks of the Last 20 Years

In this article, we will take a look at the 5 most profitable stocks of the last 20 years. If you want to explore similar stocks, you can go to 22 Most Profitable Stocks of the Last 20 Years.

5. Alphabet Inc. (NASDAQ:GOOG)

Average Net Income: $18.28 billion

Number of Hedge Fund Holders: 152

At the end of Q4 2022, 152 hedge funds were long Alphabet Inc. (NASDAQ:GOOG) and disclosed position worth $17.6 billion in the company. Of those, TCI Fund Management was the top investor in the company and held a position worth $4.83 billion.

With a 20-year average annual net income of $18.28 billion, Alphabet Inc. (NASDAQ:GOOG) is the fifth most profitable stock of the last 20 years.

Here is what Diamond Hill Capital had to say about Alphabet Inc. (NASDAQ:GOOG) in its Q4 2022 investor letter:

“Other bottom contributors included media and technology giant Alphabet Inc. (NASDAQ:GOOG), apparel and footwear company V.F. Corporation and utility operator Dominion Energy. We believe Alphabet’s shares underperformed on concerns of a weakening macroeconomic environment. The company also reported weaker-than-expected earnings and revenue for Q3 2022. Longer-term, we expect Alphabet’s search engine advertising, YouTube advertising and other initiatives to continue driving revenue growth. As such, we used the share price weakness this quarter to add to our position.”

4. JPMorgan Chase & Co. (NYSE:JPM)

Average Net Income: $21.08 billion

Number of Hedge Fund Holders: 100

Over the last 20 years, JPMorgan Chase & Co. (NYSE:JPM) has generated an annual net income of $21.08 billion, on average. The stock is ranked among the most profitable stocks of the past 20 years.

At the close of the fourth quarter of 2022, 100 hedge funds held stakes in JPMorgan Chase & Co. (NYSE:JPM). The total value of these stakes amounted to $5.17 billion. As of December 31, Greenhaven Associates is the leading shareholder in JPMorgan Chase & Co. (NYSE:JPM) and has a stake worth $643.1 million.

Here is what Vltava Fund had to say about JPMorgan Chase & Co. (NYSE:JPM) in its third-quarter 2022 investor letter:

“We regard JPM to be the strongest and best- managed bank in the world. It is a leader in investment banking, commercial banking, credit cards, and asset management. Its size (the largest bank in the USA, with nearly USD 4,000 billion in assets) and diversification give it a strong competitive advantage that is compounded by its cost advantages and the high costs to clients associated with switching banks. JPM’s management prides itself on running the only large bank to avoid major instability over the long term.

JP Morgan’s quality and strength first became fully evident in 2008 under the leadership of its CEO Jamie Dimon. Not only did JP Morgan help to stabilize the market by taking over the failing Bear Stearns in the spring of that year, but throughout the Great Financial Crisis it was the only big US bank that did not require government assistance and it was highly profitable even in the difficult year of 2008.

A well-functioning and efficient bank can be a very good long-term investment, because the interest compounding effect works well here. JPM’s return on equity (ROE) is well into the double digits and this puts it in a good position to continue producing better long-term returns than does the market. JPM has been very profitable even during years when interest rates were close to zero. The current – and perhaps not temporary – return to somewhat more normal, higher interest rates should have a significantly positive impact on the bank’s interest income and overall profitability.”

3. Microsoft Corporation (NASDAQ:MSFT)

Average Net Income: $24.09 billion

Number of Hedge Fund Holders: 259

For fiscal 2022, Microsoft Corporation (NASDAQ:MSFT) generated an annual net income of $72.74 billion. Microsoft Corporation (NASDAQ:MSFT) has generated an annual net income of $24.09 billion, on average, over the past 20 years. The stock is placed third on our list of the most profitable stocks of the last 20 years.

At the end of the fourth quarter of 2022, Microsoft Corporation (NASDAQ:MSFT) was held by 259 hedge funds. These funds held collective positions worth $58.65 billion in the company. As of December 31, Bill & Melinda Gates Foundation Trust is the largest shareholder in the company and has disclosed a position worth $9.41 billion.

Here is what Polen Capital had to say about Microsoft Corporation (NASDAQ:MSFT) in its fourth-quarter 2022 investor letter:

“In the case of Microsoft Corporation (NASDAQ:MSFT), the company is performing very well. Azure now represents nearly 25% of the total business and continues to compound at a higher rate. Although growth is moderating a bit recently (as it is for AWS and Google Cloud Platform as well), these three platforms collectively generated more than $140 billion in revenue during the last 12 months and are still growing at a healthy rate. Further, Microsoft Cloud, or commercial cloud (which includes Azure and other cloud services, Office 365 Commercial, the commercial portion of LinkedIn, Dynamics 365, and other cloud properties) continues to grow roughly 30% and is now about half the business. Mathematically, commercial cloud could decelerate to 20% growth with all other segments decelerating to zero growth and total company revenue growth would still be at least double digits. We believe Microsoft is positioned to compound underlying earnings per share at a midteens rate over the next five years. At 22x earnings, we felt the valuation was attractive and that it should be a large position.”

2. Exxon Mobil Corporation (NYSE:XOM)

Average Net Income: $27.21 billion

Number of Hedge Fund Holders: 79

With a 20-year average annual net income of $27.21 billion, Exxon Mobil Corporation (NYSE:XOM) is one of the most profitable stocks of the last 20 years. The company’s annual net income for fiscal 2022 amounted to $55.74 billion.

At the close of the Q4 2022, 79 hedge funds were long Exxon Mobil Corporation (NYSE:XOM) and disclosed positions worth $7.10 billion in the company. This is compared to 75 positions in the previous quarter with stakes worth $5.53 billion. The hedge fund sentiment for the stock is positive.

As of December 31, GQG Partners is the most prominent shareholder in Exxon Mobil Corporation (NYSE:XOM) and has a position worth $3.63 billion in the company.

1. Apple Inc. (NASDAQ:AAPL)

Average Net Income: $34.69 billion

Number of Hedge Fund Holders: 135

Apple Inc. (NASDAQ:AAPL) stock was owned by 135 hedge funds at the end of Q4 2022. The total stakes of these hedge funds amounted to $136.3 billion in the company. As of December 31, Berkshire Hathaway is the leading investor in the company and has a position worth $116.30 billion.

For fiscal 2022, Apple Inc. (NASDAQ:AAPL) reported record profits and generated an annual net income of $99.80 billion. The company’s 20-year average annual net income sits at $34.69 billion and makes it the most profitable stock of the last 20 years.

Here is what Distillate Capital had to say about Apple Inc. (NASDAQ:AAPL) in its third-quarter 2022 investor letter:

“The largest new purchase was Apple Inc. (NASDAQ:AAPL), which after underperforming saw its valuation improve significantly. Over the course of the last year, Apple’s consensus estimated forward free cash flows rose modestly, while its enterprise value fell by around 30%. Apple ranks below the 25th most attractive name in the portfolio and so its weight is capped at 4% vs. 6% for names in the top quartile.”

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