Last year was a good year for stock investors. The overall stock market boomed in 2025, with the S&P 500 index posting a 16% return, marking the index’s third consecutive year of double-digit gains.
Of course, you could have done better if you owned certain stocks.
For example, microchip giant Nvidia’s annual profit margin has increased by about 40%, and Google’s parent company Alphabet has increased by about 65%.
But there were some names you probably haven’t heard of that performed even better. Consider the Russell 1000 index. It tracks approximately 1,000 stocks traded in the United States, including names of small and large companies. Among the top 10 companies of 2025, Robinhood is the first name at number six.
The biggest winner is Lumentum Holdings, a company that provides equipment focused on powering AI data centers. Shares rose 339% last year as investors bet on the company’s ability to profit from continued growth in the AI space.
You can log into your brokerage’s stock screening tool, perform the same exercise for large and small stocks, or stocks within a specific sector, and get your own investor version of “Spotify Wrapped.” The question is, in a given year, or within a given index, is it worth buying the previous year’s winners?
Probably not, at least based on recent performance alone, says Jeff Ptak, managing director at Morningstar Research Services.
“They definitely have a certain seductive appeal to them. Who doesn’t love a spectacular return?” he says. “The problem is, you’re talking about the extremes of extremes.”
Last year’s biggest winners often have rebounded from some type of financial distress or have had their prices inflated by overzealous investors, both phenomena that can lead to overvalued stocks, Ptak said.
“Generally, it’s a very bad idea to fish in those waters,” he says.
How to handle winners in your portfolio
Investment professionals typically advise you to set some important guardrails if you want to invest in individual stocks. Experts advise investing most of your money in a broadly diversified portfolio to avoid the risk of underperformance due to a decline in one investment. Consider talking to a financial advisor about setting up a portfolio that’s right for you.
Sam Stovall, chief investment strategist at CFRA, also says it’s wise to invest based on a stock’s underlying fundamentals, such as earnings growth, profit margins and cash flow, rather than trying to time stock price movements.
“Don’t try to time the market with a large portion of your portfolio,” he says. And if you want to dabble in individual stocks, “don’t buy on faith, don’t overleverage, and don’t risk losing money.”
While you may not want to add last year’s winners to your portfolio as new positions, Stovall says it’s wise to hold on to the high-performing stocks you already own rather than sell them.
“Historically, you’re better off buying winners, because after a bad year, you want to buy last year’s losers,” he says. “But after a few years, that’s when you want to own last year’s winner.”
Since 1990, stocks in the three best-performing sectors last year have outperformed the S&P 500 index by about 3 percentage points a year on average, about 70% of the time, according to CFRA.
In other words, historically, high-performing stocks tend to continue to do well as a group even after years when the market as a whole does well. Stovall says that makes sense because investors who have won big on paper are more likely to expect future profits and may even recommend their winning positions to friends.
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