Arista Networks stock has skyrocketed over the past few years. How much money could you make?
Arista Networks (ANET -0.75%) The stock price probably made many investors very happy. But not everything was easy money. Over the past five years, stock prices have soared. However, there are some caveats to these returns.
Arista stock was doing well, but not if it made this one mistake
If you invested $200 in Arista stock just five years ago, you would now have $1,043. That’s a great return.If I had invested that money in S&P500In comparison, it will only cost you about $374.
Over the past five years, Arista’s stock price has been supported by rising sales. Since 2019, revenue has increased by 157%. Meanwhile, the company’s price-to-sales ratio rose from 8.5x to 16.8x during the period. So not only has the company’s sales increased significantly, but the price the market is willing to pay for those sales has also nearly doubled. Combining these, Arista was able to achieve his 422% performance over the past five years.
Every legendary achievement has its flaws. Arista’s rapid growth comes after years of disappointment. For example, from 2018 to 2021, stock prices were essentially flat. After that, the stock price skyrocketed in just a few years. This was driven by increased demand and investor interest in high-performance computing stocks, particularly those tied to the rise of artificial intelligence.
Arista’s strong five-year performance is yet another reminder that patient investors are often the biggest winners. Those who have been buying and selling stocks may have missed the biggest moves in stocks. As Warren Buffett advised in his 1989 memo to shareholders, “The stock market is a device for transferring money from impatient people to patient people.”
Ryan Vanzo has no position in any stocks mentioned. The Motley Fool has a position in and recommends Arista Networks. The Motley Fool has a disclosure policy.
