Stocks are having a rough start to the year, but this year will be a smooth one for investors.
That’s the take of three outperforming stock-letter writers with strong track records. Stock-letter writers might not get the kind of media attention given to star mutual-fund and hedge-fund managers. But many of them in fact are better market strategists.
The three who share their 2025 market outlooks and favorite stocks below have posted double-digit annualized returns over the past 15 years. (The performance data comes from the Hulbert Financial Digest, which is run by MarketWatch contributor Mark Hulbert.)
Here’s a look at where these stock-letter gurus see the stock market and the U.S. economy are headed this year, plus a handful of their favorite stocks. Note that all three of these managers suggest broad portfolio diversification to reduce risk.
1. Investment Quality Trends stock letter : “If [President-elect Donald] Trump is allowed to get his policies in place we could be poised to have real, legitimate organic economic growth, not financial engineering growth,” portfolio manager Kelley Wright said. “That would generate real profits and dividend increases. I think we could have a rockin’ market.” He expects the S&P 500 SPX to return at least 8% this year. A risk to that forecast? U.S. inflation stays higher for longer.
Wright screens for financial strength, high return on both invested capital and cash flow, and other balance sheet quality metrics. He also wants to see 25 consecutive years of uninterrupted dividends. To pin down entry points, he identifies the repetitive high dividend yields for names. Historically high-yields suggest buyable low valuations. Among Wright’s favorites:
2. The Prudent Speculator stock letter: Portfolio manager John Buckingham expects 2% U.S. GDP growth this year to support an 8% gain for the S&P 500. He thinks value will outperform because growth stocks look expensive. “Growth scares me because valuations are rich,” Buckingham says. He looks for the Russell 3000 Value Index to finish the year up 15%, with inflation staying tame enough to avert U.S. Federal Reserve rate hikes.
A value-stock investor, Buckingham looks for discounted stocks with decent growth prospects. “I still believe in the idea that if a business does well, its stock will follow.” Here are two that fit the bill.
3. Blue Chip Investor stock letter: Check Capital Management, the company behind this letter, doesn’t make market predictions. But with consensus earnings growth for the S&P 500 at around 12% for 2025, “it would be hard to see a down market with that kind of earnings forecast,” says Senior Investment Officer Alan Ebright.
Blue Chip Investor favors shares of large, household-name companies with experienced management and durable competitive advantages, trading at discounts. “When you go through downturns the obsolescence factor at these companies is very small,” Ebright says. If anything, companies with moats can take advantage of downturns to buy competitors. The average holding period at Check Capital is six years.
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