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S&P 500: Young CEOs and Their Must-Buy Stocks S&P 500: Young CEOs and Their Must-Buy Stocks

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It’s a tale as old as time. The seasoned veteran, the silver fox, the sage leader—the one who is supposed to navigate the treacherous waters of the stock market and steer their company toward triumph. But, hold onto your hats, because what if I told you that some of the best-performing CEOs in the S&P 500 are not the grizzled, weathered highbrows of Wall Street, but rather, the fresh-faced, under-50 whiz kids?

The more experienced, the better, right? Not so fast. Recent data from executive search firm Spencer Stuart presents a compelling case for the rising stock market stars who are not yet eligible for AARP membership cards. In 2022, the percentage of new S&P 500 CEOs under 50 doubled compared to 2018 levels, indicating a budding trend toward youth at the top.

“What worked at a CEO’s last job — at a different company with a different team facing a different set of micro and macro problems — is just not likely to work again,” stated Bloomberg Opinion contributor Beth Kowitt.

Ms. Kowitt’s insight is astute. The baton must be passed, the generational torch lit, and the wisdom of hindsight acknowledges the folly of foddering the status quo. And if we dare to cast our gaze on a quarter-century’s horizon, we’ll find more than a sprinkle of CEOs who were sprightly under the age of 40.

So, let’s turn our attention to three under-50 S&P 500 CEOs with stocks worth their weight in gold.

Targa Resources (TRGP): Matthew Meloy

Momentum stocks: Natural gas pipeline through green field with blue sky above

Source: Shutterstock

The tale of Matthew Meloy, CEO of Targa Resources (TRGP), speaks the language of triumph. Taking the reins on March 1, 2020, when Meloy was a youthful 45, the integrated midstream natural gas and NGLs (natural gas liquids) infrastructure company has seen its shares soar by nearly 200%. That’s double the performance of the venerable Exxon Mobil (NYSE:XOM).

When I last sang Targa’s praises in May 2023, analysts were rather fond of its stock, giving it a Buy rating with a target price of $98.50. But what tickled my fancy was its price-to-free cash flow, a modest 6.68, and a free cash flow yield of 14.7%, which is well within the value territory if my memory serves me right.

Now, fast forward to the present, where 22 analysts cover TRGP, with 21 flashing the Buy signal and a target price of $106—10% higher than its current trading spot. While its free cash yield is a smidgen below fair value, Targa plays hard to get with a yield of 2.1%, nudging investors to pay the premium for quality.

ON Semiconductor (ON): Hassane El-Khoury

AI. Circuit board. Technology background. Central Computer Processors CPU concept. Motherboard digital chip. Tech science background. Integrated communication processor. 3D illustration representing semiconductor stocks. Semiconductors Stocks to Sell

Source: Shutterstock

Hassane El-Khoury, the CEO of ON Semiconductor (NASDAQ:ON), is the virtuoso conductor who has orchestrated a 163% surge in the company’s shares since taking the helm in December 2020, when he was a sprightly 43 years young. His previous stint as the CEO of Cypress Semiconductor until its acquisition by Infineon Technologies (OTCMKTS:IFNNY) in April 2020, for 9 billion euros ($9.7 billion), was a prelude to El-Khoury’s stellar performance at ON Semiconductor.

While ON Semiconductor dons the corporate garb, it dances to the rhythm of the Onsemi brand, birthing $8.3 billion in revenue and $2.26 billion in non-GAAP income in 2023. And here’s where it gets even juicier: the company is revving up for a revenue growth spurt, targeting an 11% annual surge between 2024 and 2027, with a projected annual free cash flow of $3.75 billion in 2027.

The whispers from the market murmurs that 19 out of 34 analysts rate ON as a Buy, with a target price of $90.00 – a 14% premium over its current trading price. If the crystal ball serves right, it foretells a tale of soaring share prices.

Meta Platforms (META): Mark Zuckerberg

Now, let us tip our hats to Mark Zuckerberg, the prodigious architect behind the Meta Platforms (formerly Facebook). A pioneer who has etched his name in the annals of the digital revolution, Zuckerberg’s metamorphosis into the CEO of Meta Platforms has been a spectacle worth watching.

The Incredible Turnaround of Meta Platforms (META): A Remarkable Tale of Resilience and Rebirth

In this photo illustration the Meta logo seen displayed on a smartphone and in the background the Facebook logo

Source: rafapress / Shutterstock.com

Mark Zuckerberg: A Powerhouse of Innovation

Mark Zuckerberg, the maverick behind Meta Platforms (META), is ready to hit the big 4-0 milestone. Despite his relatively young age, this tech giant has become the fourth wealthiest individual globally, boasting a staggering net worth of $170 billion. In the whirlwind of 2024, his wealth soared by nearly $42 billion, overshadowing even the esteemed CEO and co-founder of Nvidia (NVDA), Jensen Huang. Since its inception in 2004, Zuckerberg has been at the helm of Meta, steering its course with unwavering determination and innovation.

The Phoenix-Like Resurgence of Meta

Meta’s meteoric rise in the past year is the stuff of legend – its stock skyrocketed by a mind-boggling 175% over the last 52 weeks. However, this triumph comes after a tumultuous period in early 2022 when the company faced a grim reality: the first-ever decline in Facebook’s daily users. The situation looked bleak, resembling an ambitious expedition that had lost its compass in a tempest. But, against all odds, Meta staged a breathtaking comeback that rivals the most glorious revivals in recent memory.

“Meta CEO Mark Zuckerberg may be keen to coax the world into an alternate reality, but disappointing fourth-quarter results were quick to burst his metaverse bubble.”

The Guardian reported Hargreaves Lansdown equity analyst Laura Hoy’s comments about the company’s 2021 results.

Empowering Revival Amidst Revenue Fluctuations

In 2021, Meta boasted an operating income of $46.8 billion, achieving this feat on $117.93 billion in revenue, showcasing a stellar 39.7% operating margin. However, this glorious peak faced an inevitable slump in 2023, with an operating profit of $46.75 billion on $134.90 billion in revenue, marking a 500 basis points decline compared to the preceding year. This revenue rollercoaster did little to dampen the spirits of Meta’s resurgence. Despite its setbacks, the company is imbued with a resiliency akin to that of a mythical phoenix rising from the ashes, with numerous avenues to continually bolster its revenue and bottom line.

If only Meta’s Reality Labs business could start bringing in profits, Zuckerberg would be well on his way to claiming the title of the world’s wealthiest person. Another feather in his cap, you could say.

On the date of publication, Will Ashworth did not have (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.

Will Ashworth has written about investments full-time since 2008. Publications where he’s appeared include InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger, and several others in both the U.S. and Canada. He particularly enjoys creating model portfolios that stand the test of time. He lives in Halifax, Nova Scotia.