Which five stocks are going to be the best performers over the year ahead? I'm afraid I don't know the answer to that question -- and, more importantly, no one else knows, either. Lots of people will be happy to guess and predict, but they can't know.
That's the bad news. There's some good news, though. There are some investments you can make that will stand a good chance of making you a part owner of some of 2025's best stock performers. Here's a look at some of these investments.
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1. A simple, broad index fund
The best way to maximize your chances of investing in tomorrow's biggest winners is not to look for the needle in the haystack but rather to simply invest in the haystack instead. You can do so via a low-fee S&P 500 index fund that will immediately have you invested in 500 of America's biggest companies -- including all of the "Magnificent Seven" -- Apple, Amazon (Google's parent), Alphabet (Facebook's parent), Meta Platforms, Microsoft, Nvidia, and Tesla.
The S&P 500 has averaged annual returns close to 10% (ignoring inflation) over long periods, and over the last decade, it has averaged around 13.7%.
You might cast an even wider net by investing in an index fund that aims to deliver the performance of the total U.S. stock market, or one that tracks the total world stock market. Here are three solid exchange-traded funds (ETFs) built around broad indexes to consider:
Vanguard S&P 500 ETF(NYSEMKT: VOO)
Vanguard Total Stock Market ETF(NYSEMKT: VTI)
Vanguard Total World Stock ETF(NYSEMKT: VT)
Following are several, more specialized funds:
2. The Vanguard Growth ETF
The Vanguard Growth ETF(NYSEMKT: VUG) tracks the CRSP U.S. Large Cap Growth Index, which is focused on faster-growing large companies. It recently held 182 stocks, with about half of them in the technology sector and close to 28% divided between the consumer cyclical and communication services sectors.
Since this ETF is focused on faster growers, it might be likely to include the powerhouse performers of 2025 -- and to give them a greater weighting than a broader index fund would. Over the past decade, this ETF has averaged annual gains of 16.4%.
3. The Technology Select Sector SPDR Fund
If you think there's a good chance that the best-performing stocks of 2025 will be tech stocks, you might simply park some of your money in the Technology Select Sector SPDR Fund(NYSEMKT: XLK). It recently held 69 stocks of businesses such as semiconductor equipment makers, internet software and services, IT consulting services, computers, and peripherals.
Over the past decade, this ETF has averaged annual gains of nearly 21%, which is quite impressive indeed. Remember, though, that in a market downturn, high-flying growth stocks may well drop sharply in value (often recovering eventually).
4. The VanEck Semiconductor ETF
It's not hard to imagine that semiconductor stocks are likely to perform well in the coming years -- very possibly in 2025. If you're a semiconductor bull, consider investing in one of several great ETFs, such as the VanEck Semiconductor ETF(NASDAQ: SMH). It's been a phenomenal performer in recent years, averaging annual gains of 26.3% over the past decade.
5. The SPDR Portfolio S&P 600 Small Cap ETF
Most of the companies in most of the ETFs above will be fairly large companies. You might want to cast your net across small companies, though, remembering that the Nvidias and Apples of today began as much smaller businesses. One of several promising small-cap index funds to consider is the SPDR Portfolio S&P 600 Small Cap ETF(NYSEMKT: SPSM).
Small caps in general have lagged their larger counterparts in recent years, but that's not always the case. If you think they will outperform, consider this ETF. It has averaged annual gains of 9.5% over the past decade.
6. The Vanguard Mid-Cap Growth Index Fund ETF
The Vanguard Mid-Cap Growth Index Fund ETF(NYSEMKT: VOT) is a solid ETF to consider if you don't want the higher risk of small-cap companies (many of them never become large-cap companies) but you do hope to invest in great businesses before they become too large. This ETF has averaged annual gains of 11.3% over the past decade.
By now you get the idea. You can't know now which companies will be 2025's superstars. But you might invest a chunk of your portfolio in one or more ETFs that are likely to contain some or all of those superstars.
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Selena Maranjian has positions in Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, and Vanguard Index Funds-Vanguard Growth ETF. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, Tesla, Vanguard Index Funds-Vanguard Growth ETF, Vanguard Index Funds-Vanguard Mid-Cap Growth ETF, Vanguard S&P 500 ETF, and Vanguard Total Stock Market ETF. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
