The 12 Best Stocks of 2025, Plus 3 That Could Run Into Trouble -- Barrons.com

Al Root

Investors have a love/hate relationship with winning stocks. While everyone wants a winner, the bigger the gain, the more the anxiety about what comes next.

Barron's took a look at the year's hottest stocks to see if investors should be worried. What we found could help calm some nerves, and might even stop investors from making the mistake of jettisoning the big winners too early.

Coming into the week, the S&P 500 was up about 16% year to date, putting it on pace for a third consecutive double-digit annual gain, with the possibility of a third consecutive rise of more than 20%. About 60% of S&P 500 stocks are up this year, and the average gain for shares was about 10%.

A handful of S&P 500 stocks have done much better. Not counting Warner Bros. Discovery, whose stock has taken off because the company is going through a widely discussed sale process, the names were as follows, through midday on Tuesday.

   -- Western Digital, the maker of data-storage hardware; 
 
   -- Robinhood, the financial technology platform; 
 
   -- Seagate Technology, a provider of data-storage hardware; 
 
   -- Micron Technology, also in the data-storage business; 
 
   -- Newmont, the gold miner; 
 
   -- Palantir Technologies, an AI software company; 
 
   -- Lam Research, which makes equipment for semiconductor manufacturers; 
 
   -- Amphenol, a producer of electrical components; 
 
   -- Intel, in the chips business; 
 
   -- Applovin, an AI software platform; 
 
   -- KLA, a maker of semiconductor equipment; 
 
   -- and NRG Energy, a power company. 

Those 12 stocks were up an average of 145% year to date, through midday trading on Tuesday. On average, they also trade for about 43 times the earnings expected over the next 12 months, up from 33 times a year ago. The S&P 500 trades for closer to 22 times.

The dozen winners are expensive, but for a reason. Their growth has been spectacular. Earnings for the 12 are expected to grow by an average of roughly 80% in 2025 as Intel flips from a loss in 2024 to a profit. Earnings growth in 2026 is expected to be 40%.

That means the price-to-earnings-to-growth, or PEG, ratio for the dozen is about one, meaning that factoring in how rapidly their earnings are rising, the stocks aren't crazily expensive. The S&P 500's PEG ratio is closer to two times.

To be sure, at least nine stocks have strong ties to the AI trade, putting them at risk if sentiment worsens regarding artificial intelligence. A single bad quarter from Nvidia, seen as a bellwether for investment in AI infrastructure, could disrupt everything, says Ocean Park Asset Management chief investment officer James St. Aubin.

But the AI theme remains a risk and opportunity for the entire market. Three of the winning dozen look a little wobbly for other reasons.

Palantir is the most expensive and has one of the highest PEG ratios, at 2.3 times. Only 31% of analysts covering the stock rate shares Buy, according to Bloomberg, way below the average of 63% for the dozen big winners. The average Buy-rating ratio for S&P 500 stocks is about 58% currently.

Wall Street ratings are somewhat subjective, but analysts are paid to understand the industries they cover, so what they say is worth considering.

KLA is tied for the highest PEG ratio with Palantir, and analysts aren't as optimistic as they once were. The stock has lost two Buy ratings in the past three months, leaving it with 12. Two downgrades from Buy might not seem like a lot, but it is the highest total among the dozen stocks. Currently, 40% of analysts covering KLA shares rate them Buy.

And Intel is trading about 13% above its average analyst price target, the largest premium in the dozen. Only 12% of analysts covering the stock rate shares at Buy.

Those three look the most vulnerable, based on Barron's criteria. While the stocks could continue to impress, posting better-than-expected earnings growth in 2026, investors might want to watch them more closely.

As the saying goes, past performance isn't a guarantee of future success.

Write to Al Root at allen.root@dowjones.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

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December 03, 2025 14:16 ET (19:16 GMT)

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