pick a clear winner

CNBC’s Jim Cramer details his approach to investing in high-quality growth stocks, telling investors it’s important to look for companies with strong track records.

“It’s just hard to find these hero stocks if you pick them randomly,” he said. “Anyone with eyes to see, we’re talking about clear winners who tend to keep winning year after year.”

He reviewed some of the best stocks of the past 20 years: megacaps categorized into two groups: FAANG. Metaformerly known as Facebook, Amazon, apple, Netflix and google –And the Magnificent Seven– NvidiaAmazon, Alphabet, Apple, Meta, microsoft and tesla.

Mr. Kramer reviewed the FAANG returns and noted that many were higher than the FAANG returns. S&P500 The past decade or so has seen double-digit increases. These stocks are “hiding in plain sight,” he suggested, and said he has frequently recommended them over the years. Cramer emphasized that he is not advising investors to buy stocks that appear to be doing well. Most stocks don’t have a strong pedigree, and their profits are “often the product of an enthusiastic public and greedy investment bankers looking to feed the madness.”

He cited research by economist Hendrik Bessenbinder, which looked at stock performance from 1925 to 2023 and found that a small number of individual stocks generated most of the market’s gains. Bessenbinder found that thousands of stocks actually made a profit, but Kramer noted that 17 stocks produced huge returns, although not necessarily enough to justify the investment compared to index funds. These high-yield stocks were relatively well-known companies, Kramer continued. boeing, IBM, coca cola, Dear and johnson & johnson.

“I’m always looking for not just the Amazon, but the next Amazon, the next Netflix, or the next Nvidia. When the Magnificent Seven loses its greatness, believe me, there’s another Seven out there waiting to be discovered,” he said. “And they, too, could be very obvious. But as long as I think these proven winners can stay strong and deliver, I’m sticking with them.”

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Disclaimer CNBC Investing Club Charitable Trust owns stock in Nvidia, Microsoft, Home Depot, and Amazon.