investment

Choosing How to Invest Will Depend on Financial Goals and Risk Tolerance

Reviewed by JeFreda R. Brown
Fact checked by Vikki Velasquez

Dividend exchange-traded funds (ETFs) look for value stocks with higher-than-average dividend yields, making them a good choice for income-oriented investors. The Standard & Poor’s (S&P) 500 is a broad index of large-cap American stocks. Some pay dividends but others don’t.

You can’t invest directly in the S&P 500. You must buy a mutual fund or ETF that mirrors the S&P 500 such as the SPDR (SPY) to gain exposure to the whole of the S&P 500. The S&P 500 is often better for those who are looking to balance capital growth and income potential. It offers diversification across several sectors and has a history of steady long-term returns.

Making an informed decision between investing in dividend ETFs or the S&P 500 index requires identifying your financial goals, risk tolerance, and investment timeline. Both are solid vehicles for long-term investment but they offer distinct advantages and disadvantages.

Key Takeaways

• Dividend ETFs invest in high-yielding dividend stocks to maintain a stable, steady income.
• The S&P 500 is a broad-based index of large U.S. stocks that provide growth and diversification.
• Both have unique advantages and disadvantages.
• The best choice for you will depend on whether you’re looking for income or growth from your investments.

Dividend ETFs vs. S&P 500: An Overview

There are two fundamental investment approaches: dividend investing and broad-based index investing. Each serves a distinct purpose and appeals to different investors based on factors like risk tolerance, financial goals, and the need for income or growth.

Dividend ETFs are tailored for investors who seek a consistent and reliable income stream. These funds invest in companies that are known for paying out dividends regularly. The S&P 500 aims for a more balanced approach. It does include some dividend-paying companies but it’s focused on offering investors a snapshot of the U.S. economy’s overall performance. It attracts investors who are interested in income and capital growth.

Dividend Investing

Dividend investing is a strategy that’s centered on acquiring the stocks of companies that pay dividends to their shareholders. These dividends are usually distributed as cash payments or additional shares of stock. Dividends are appealing because they provide a regular income, making them popular with retirees or those seeking to supplement their earnings.

Companies that pay dividends are also likely to be more durable and financially stable and this can translate to less volatility in your portfolio. Dividend investing often leans toward particular sectors that aren’t known for outsized growth, however, such as utilities or consumer staples. This could limit your chances for capital appreciation.

Important

Reinvesting dividends can significantly increase long-term returns thanks to the power of compounding. This process can lead to exponential growth in the value of your investment because both your initial investment and the reinvested dividends earn returns.

Dividend ETFs are generally more stable when it comes to market fluctuations, but not always. Dividend funds primarily invest in well-established companies with a history of profitability and dividend payments. They’re usually less sensitive to ups and downs in the market. The S&P 50 reflects a broader range of the market, including stable giants and more volatile growth companies. It tends to be more susceptible to market volatility as a result.

You might find dividend ETFs more suitable if you’re a risk-averse investor or looking for a less tumultuous investment experience.

Index Investing

Index investing aims for a more comprehensive and diverse exposure to the market. This strategy isn’t confined to a particular sector or type of stock but distributes the risk by holding various assets and tracking a benchmark index.

The focus is generally on long-term growth, capturing the movement of the overall market. Index funds usually have lower fees than actively managed funds for this reason, allowing you to keep more of your returns. The primary aim is growth but many indexes like the S&P 500 also include dividend-paying stocks, offering a modest income stream.

A significant advantage of investing in the S&P 500 is its inherent diversification. It includes hundreds of companies across various sectors so you automatically get a diversified portfolio when you invest in this index. This broad exposure can help mitigate the risks associated with downturns in any particular sector.

Dividend ETFs are diversified to some extent but they often have a heavier concentration in sectors that are known for dividend stability. This focus can be beneficial for income and lower volatility but it might expose you to sector-specific risks and limit your portfolio’s growth potential.

Pros and Cons of Dividend ETFs

Dividend ETFs are designed to generate consistent income. They might not always grow dramatically but they’re often perceived as stable and somewhat conservative. They tend to attract income-oriented investors. These ETFs often hold high-dividend-paying common stocks, preferred stocks, and real estate investment trusts (REITs) to earn a high dividend yield.

Pros

• Consistent income

• Less volatility

• Potential tax benefits

Cons

• Limited growth potential

• Vulnerability caused by sector concentration

• Taxes on dividend income

• Sensitive to interest rate changes

Advantages

You’re essentially signing up for a more predictable and consistent income stream when you invest in dividend ETFs. They’re relatively stable in turbulent markets because they usually invest in financially solid companies that have proven track records. These stocks often act as buffers, protecting your investment in a volatile market.

Don’t overlook the potential tax benefits, either. The Internal Revenue Service often taxes qualified dividends at a lower rate than ordinary income. This favorable tax treatment can make a noticeable difference in your returns over time.

Disadvantages

One of the tradeoffs for consistent income and lower risk is a lesser growth potential. Companies that regularly pay out dividends tend to be more conservative in reinvesting profits for expansion. This can be a drawback if you’re looking for strong capital gains over the long term.

Sensitivity to interest rate changes is another factor to consider. The fixed income from dividends can become less appealing than bonds and other interest-bearing assets when interest rates climb. This shift in investor preferences can lead to a drop in the share prices of dividend-paying companies and affect the overall value of your ETF.

Note

You must pay taxes on the dividends you receive as well, even if you reinvest them.

Then there’s the issue of sector concentration. Many dividend ETFs are heavily invested in specific industries with dividend-paying track records. This focus can add predictability but it can also make your portfolio less diversified and more vulnerable to sector-specific risks.

Pros and Cons of the S&P 500

The S&P 500 is often the benchmark index for the health of the overall U.S. stock market. It includes the 500 largest American companies that amount to approximately 80% of total market capitalization.

The S&P has long been a reliable performer that balances capital growth and income, making it a versatile choice for various types of investors. It’s well-diversified, holding a range of stocks from each sector.

Pros

• Broad diversification

• Low-cost investments

• Potential for growth

Cons

• Market sensitivity

• No guaranteed income

• Short-term volatility

Advantages

You’re not putting all your eggs in one basket but rather in 500 baskets when you invest in a mutual fund or ETF that mirrors the S&P 500 index. You’re getting a slice of the broader U.S. economy, diversifying your investment across industries such as technology, healthcare, finance, and consumer goods. This diversified approach can be a financial safety net that reduces your exposure to downturns in any sector.

The index captures the performance of the largest and most influential companies in the United States and many of them are growth-oriented. This translated into an average annual return of around 9.75% from 2003 to 2023, not adjusted for inflation. The S&P 500 includes some dividend-paying companies but its primary appeal lies in its ability to capture market-wide growth.

The S&P 500 is also one of the most traded indexes in the world, attracting a wide range of investors from individuals to massive institutional funds. This high level of trading activity means you can easily buy or sell shares at market prices with minimal delay. High liquidity translates to more flexibility, allowing for quicker adjustments to your portfolio in response to market changes or your financial needs.

S&P 500 index funds and ETFs are also very low-cost investments because they’re passively managed and simply mirror the index’s returns.

Disadvantages

The S&P 500’s broad representation of the U.S. economy is an advantage in good times but it can be a liability during market downturns. Your investment is essentially a bet on the overall health of the U.S. stock market and the U.S. economy by extension. Your S&P 500 investment will also likely take a hit when the market suffers. It’s important to be aware of this vulnerability and consider how it aligns with your risk tolerance and investment strategy.

The S&P 500 can experience short-term volatility because of various market events ranging from economic data releases to geopolitical tensions. Such fluctuations are often temporary but they can be unsettling for conservative investors who prefer a more stable investment environment. The S&P 500 may not be the best investment for you if you’re uncomfortable with these ups and downs.

Dividend ETFs focus on income-generating stocks but the S&P 500 has more balanced goals. Some of its constituent companies do pay dividends but there’s no assurance of consistent income. The S&P 500 might not fully meet your needs if a steady income stream is a crucial part of your investment strategy.

Choosing Between ETFs and the Index

It’s tempting to simplify the choice between dividend ETFs and the S&P 500 to a matter of risk tolerance and financial goals but there are other factors to consider.

Time Horizon

Dividend ETFs may offer less pressure on those with a shorter time horizon due to their focus on income and stability. They give you the flexibility to exit the market without significant losses. The S&P 500 is generally better suited for those with longer investment horizons who can ride out market volatility for the promise of higher long-term returns.

Tax Implications

Tax considerations are a factor that’s often overlooked. Qualified dividends are usually taxed at a lower rate than ordinary income but you still have to pay those taxes. Dividends could be more tax-efficient because you won’t be taxed on gains until you make withdrawals, however, or not at all if they’re held in a Roth 401(k) or Roth IRA subject to certain rules.

Economic Conditions

The state of the economy can also influence your choice. Growth stocks in the S&P 500 often outperform others in a booming economy but the reliable dividends from a dividend ETF could have a financial cushion in a recession or a stagnant economy. The state and trajectory of the broader market and economy can help inform your decision.

Investment Costs

Consider the cost of investment. Dividend ETFs and S&P 500 index funds generally offer lower expense ratios than actively managed funds but some dividend ETFs charge slightly higher fees because of the additional research and selection involved in picking dividend-paying stocks.

Do Dividend ETFs Outperform the S&P 500?

Not necessarily. Dividend ETFs can offer stable income but their growth potential is generally lower over the long run. Dividend ETFs may outperform the S&P 500 during particular time frames, however, such as during a recession or a period of easing interest rates.

What Is the Largest ETF in the U.S.?

The largest ETF in the U.S. as measured by assets under management (AUM) is the SPDR S&P 500 ETF Trust (SPY). It tracks the movement of the S&P 500 and had $590.7 billion in AUM as of Nov. 1, 2024.

Does the S&P 500 Pay Dividends?

The S&P 500 doesn’t pay dividends itself but many of the individual companies within the index do so.

You’re effectively investing in a basket of 500 large-cap U.S. stocks when you invest in an S&P 500 index fund or ETF and a significant portion of them are dividend-paying companies. These dividends are usually collected by the fund and then distributed to investors quarterly. The dividend yield of an S&P 500 ETF was around 1.27% as of December 2024.

The Bottom Line

Dividend ETFs and the S&P 500 serve different needs and they both have advantages and disadvantages. Both can potentially be valuable parts of a balanced investment portfolio but they are typically held for different purposes: steady income versus growth. Assess your financial goals, risk appetite, and diversification requirements to make a more informed choice.

Disclosure: Investopedia does not provide investment advice. Investors should consider their risk tolerance and investment objectives before making investment decisions.

These are the best undervalued stocks to keep an eye on this month

Value investors seek stocks that are trading on the market at a price point below their fundamental value. These stocks typically represent high-quality companies that are either emerging or whose shares have otherwise fallen. While it can be difficult to execute successfully, value investing allows investors to buy stocks at a relatively low price point and then benefit when the market eventually corrects itself and the price rises to be more in line with the company’s underlying value.

In March 2025, some likely candidates for value investors to keep an eye on include pre-clinical biotechnology firm Spyre Therapeutics Inc. (SYRE), shipping firm ZIM Integrated Shipping Services Ltd. (ZIM), and utilities outfit Korea Electric Power Corp. (KEP), among others.

Key Takeaways

• Undervalued stocks on the NYSE and the Nasdaq have 12-month trailing P/E ratios as low as 1.07.
• Value investors believe it is possible to identify companies with shares trading below their fundamental value. Later, when the market corrects this pricing error, investors achieve gains as share prices rise.
• P/E ratio is a key metric used to identify value stocks, but this figure can vary significantly from one sector or industry to the next.
• For this reason, it’s most helpful to compare potential value plays against other peers in the same sector.
• Other common value metrics include forward P/E ratio, price-to-book ratio, and price/earnings-to-growth ratio.

Below, we consider some of the top undervalued stocks for this month, as measured by 12-month trailing price-to-earnings (P/E) ratio. A detailed explanation of our methodology is found below. All data are as of Feb. 24, 2025.

Top Undervalued Stocks By Sector, Based on Lowest 12-Month Trailing P/E Ratio
Ticker	Company	Sector	Market Cap ($B)	12-Month Trailing P/E Ratio	Price ($)
PARR	Par Pacific Holdings Inc.	Energy	0.9	3.02	15.58
MUX	McEwen Mining Inc.	Materials	0.4	3.46	7.23
ZIM	ZIM Integrated Shipping Services Ltd.	Industrials	2.6	1.83	21.85
STLA	Stellantis N.V.	Consumer Discretionary	41.4	3.01	13.97
HLF	Herbalife Ltd.	Consumer Staples	0.9	3.48	8.70
SYRE	Spyre Therapeutics Inc.	Healthcare	1.3	2.31	21.26
SITC	SITE Centers Corp.	Financials	0.8	1.07	14.64
CCSI	Consensus Cloud Solutions Inc.	Information Technology	0.5	5.61	25.90
TGNA	TEGNA Inc.	Communication Services	2.8	6.15	17.46
KEP	Korea Electric Power Corp.	Utilities	9.7	3.61	7.78
REFI	Chicago Atlantic Real Estate Finance Inc.	Real Estate	0.3	7.95	15.87

Why Are These the Top Undervalued Stocks?

Our screen for the best undervalued stocks includes firms listed on either the New York Stock Exchange (NYSE) or the Nasdaq and with a price of at least $5 per share, a daily trading volume of 100,000 or more, and a market capitalization of $300 million or more. From that list, we ranked the companies in our screen by 12-month trailing P/E ratio and then selected the stock with the lowest P/E ratio from each sector.

While there are many different metrics used in value investing, P/E ratio is one of the most common. It is a measure of the price of a company’s shares against its earnings. A low P/E ratio often suggests that a firm’s recent earnings have performed well relative to its price, meaning that it is undervalued in the market.

When looking for undervalued stocks, investors should keep in mind that P/E ratio is just one of many measures of a company’s value. It’s important to look at the firm’s financials as well as other metrics like P/S ratio (for firms that have yet to achieve profitability), price-to-book ratio, and price/earnings-to-growth ratio for a fuller picture. That said, it is also inherently difficult to calculate a company’s intrinsic value, and market unpredictability means that even legitimately undervalued firms may never see a stock price increase in the future.

What Should Investors Look For in Undervalued Stocks?

While we looked at trailing P/E ratio in our screen, forward P/E ratio is also a helpful metric to use to identify undervalued stocks. The forward P/E ratio makes use of Wall Street analyst predictions of a company’s future earnings. It can be a helpful way to take stock of how developments on the horizon could impact the company’s performance, although it’s also important to note that forward P/E ratio is intrinsically speculative.

Another way of comparing price and earnings is the price/earnings-to-growth ratio, which also includes an estimate of future earnings growth. This may provide investors with a better sense of how a company is likely to fare with regard to future earnings, as well as whether the firm may be undervalued relative to potential earnings growth.

Price-to-book ratio is a measure of a company’s share price against its net value (assets less liabilities). By looking at the firm’s book value per share, investors can get a fuller view of a company’s financial wellbeing. The price-to-book ratio suggests how much investors may be willing to pay for each dollar of the company’s net value.

Finally, regardless of which metrics one uses to evaluate a company, it’s essential to consider a benchmark. When it comes to value investing, it’s impossible to determine whether a company is undervalued unless one has a sense of how it compares to peers in its industry or sector. Because P/E ratios differ significantly from one sector to another, this information helps investors make the most educated guesses possible about a company’s underlying value.

The Bottom Line

Undervalued companies may have the potential to experience outsized returns if the market corrects the price to more closely match their underlying value. Investors seeking a value play might look to metrics like 12-month trailing P/E ratio as one indicator. Our screen has revealed a selection of stocks across sectors that could be undervalued, although there is no guarantee that investors in these stocks will achieve better-than-expected results.

The comments, opinions, and analyses expressed on Investopedia are for informational purposes only. Read our warranty and liability disclaimer for more info.

As of the date this article was written, the author does not own any of the above stocks.

London is the world’s financial capital

Fact checked by Suzanne Kvilhaug
Reviewed by Samantha Silberstein

London is the capital of England and the United Kingdom. It’s home to several prominent districts that play a crucial role in the global financial landscape. London’s financial districts include Canary Wharf, the Square Mile, and Lombard Street. Each has its distinct characteristics but they all epitomize London’s financial prowess, combining modern infrastructure, historical heritage, and a concentration of financial powerhouses.

Key Takeaways

• London’s financial districts include Canary Wharf, the Square Mile, and Lombard Street, each with its distinct characteristics.
• Canary Wharf is situated in the East End and stands as a modern hub of finance, boasting impressive skyscrapers and hosting the headquarters of major banks and corporations.
• The Square Mile is commonly known as “the City” and encompasses the historical core of the city while serving as a thriving center for finance, governance, and professional services.
• Lombard Street is located within the city and holds historical significance as a street associated with banking and finance.

Canary Wharf

Canary Wharf is situated in the East End on the Isle of Dogs. It stands as a modern hub of finance and commerce, boasting impressive skyscrapers and hosting the headquarters of major banks and corporations. The district is home to some of the tallest buildings in the U.K., including the famous One Canada Square, which was once the tallest building in England.

Once a thriving docklands area, Canary Wharf underwent massive redevelopment in the 1980s and 1990s, transforming it into a modern business district. It was named after the historic West India Docks where ships carrying goods, particularly from the Canary Islands, docked in the 19th century.

Canary Wharf is primarily known for hosting the headquarters of numerous major banks, financial institutions, and professional services firms. Many multinational corporations also have a presence in the area, including those in the fields of media, technology, and law. It’s considered a vital part of London’s economy and a key contributor to the city’s status as a global financial capital.

Canary Wharf benefits from excellent transportation links. It has its own underground station that’s served by the Jubilee Line and provides easy access to other parts of London. The district is also well-connected by various forms of public transportation including Docklands Light Railway (DLR), buses, and riverboat services along the Thames.

The Square Mile

The Square Mile or the City of London (“the City”) encompasses the historical core of the city and serves as a thriving center for finance, governance, and professional services. It boasts iconic landmarks such as the Bank of England and the London Stock Exchange. It occupies a small area of approximately 1.12 square miles or 2.90 square kilometers but the Square Mile holds immense significance as a global financial center despite its relatively small size.

The Square Mile has a rich history that dates back to Roman times when it was established as a trading settlement known as Londinium. It’s grown into a center for commerce, finance, and governance over the centuries, serving as a major hub for banking, insurance, professional services, and other financial activities.

The district is characterized by a blend of historic and modern architecture. Towering skyscrapers dominate the skyline beside ancient landmarks like the Tower of London and St. Paul’s Cathedral. Notable architectural icons include the Gherkin at 30 St. Mary Axe, the Shard, and the Walkie Talkie at 20 Fenchurch Street.

The Square Mile is home to the headquarters of many international financial institutions including the Bank of England, the London Stock Exchange, Lloyd’s of London, and numerous banking corporations.

Important

The Square Mile attracts a wide range of professionals including bankers, lawyers, accountants, and consultants, making it a hub for financial and professional services.

The City has a unique political structure. It’s a separate entity from the rest of London with its own local government known as the City of London Corp. The corporation is headed by the Lord Mayor of London and governs the districts and promotes its interests. These include maintaining the City’s global financial status.

Lombard Street

Lombard Street is located within the City and holds historical significance as a street that’s associated with banking and finance, surrounded by financial institutions. It has connections to London’s financial and banking history. It stretches from the bank junction to Gracechurch Street in the eastern part of the City and is surrounded by numerous financial institutions including offices of financial services companies.

The street has a long association with banking and finance that dates back to the Middle Ages when it was home to many Italian bankers who were known as “Lombards.” These Lombard bankers played a significant role in facilitating trade and financial transactions.

Lombard Street is known for its architectural charm. The street is lined with a mix of historic buildings and modern office blocks, offering a glimpse into London’s architectural heritage. It’s also close to other notable landmarks in the City including the Bank of England and the Royal Exchange.

History of London’s Financial Districts

Each of these districts has a storied past.

Canary Wharf

The history of Canary Wharf is intertwined with the transformation of London’s docklands. The area was originally home to the West India Docks that were constructed in the early 19th century to trade with the West Indies. The decline of traditional port activity and the advent of containerization led to a decline in the use of West India Docks by the mid-20th century. The docks eventually closed in 1980, leaving behind a vast expanse of derelict land.

The British government initiated an ambitious redevelopment plan in the 1980s to revitalize the docklands area. The London Docklands Development Corp. (LDDC) was established to oversee the regeneration efforts. The former West India Docks site was identified for a new financial district as part of this plan.

Construction of the Canary Wharf development began in the late 1980s and continued into the 1990s. The project involved massive infrastructure works including the creation of a new dock, the excavation of a vast area, and the construction of high-rise office buildings. The redevelopment aimed to attract financial institutions and businesses to the area and it established Canary Wharf as a major financial district.

The Canary Wharf development project gained momentum in the mid-1990s and it began to attract major financial tenants including banks, investment firms, and media companies. Canary Wharf has continued to expand and evolve. Additional office buildings, residential developments, shops, restaurants, and cultural spaces have been added to the area.

Square Mile

The history of the Square Mile or the City is closely intertwined with the broader history of London. It’s the historic core of the city and has been a center of commerce, governance, and finance for centuries.

The origins of the Square Mile can be traced back to the Roman settlement of Londinium in the 1st century A.D. The Romans established a fortified settlement on the north bank of the River Thames that served as a trading hub and administrative center for Roman Britain. The city gradually expanded within the confines of the Roman walls, encompassing an area roughly equivalent to the present-day Square Mile.

London went through a period of decline following the departure of the Romans from Britain in the 5th century but it began to revive in the medieval era. Alfred the Great re-established the city as a trading center and fortified its defensive walls in 886.

London flourished as a hub of trade and commerce during the medieval period. Associations of craftsmen and merchants referred to as guilds played a crucial role in the city’s governance and economic activity. The city obtained a series of charters from the monarchy, granting it significant self-governing powers and privileges.

London has faced numerous challenges throughout its history including outbreaks of plague and political conflicts. One of the most significant events was the Great Fire of London in 1666 which destroyed much of the city including the medieval St. Paul’s Cathedral. The fire led to a major rebuilding effort with renowned architect Sir Christopher Wren overseeing construction of new churches and public buildings including the iconic St. Paul’s Cathedral that stands today.

London solidified its position as a global financial center during the 19th and 20th centuries. The Bank of England which had been founded in 1694 became a central institution in the city’s financial system. The London Stock Exchange which had been established in the 17th century facilitated the trading of stocks and securities.

The Square Mile has undergone significant modernization and redevelopment. It’s seen the construction of modern office buildings, skyscrapers, and iconic landmarks such as the Gherkin and the Shard. The area continues to be a thriving center of finance.

Lombard Street

Lombard Street in London has a long and significant history, particularly relating to banking and finance. The name “Lombard” derives from the Lombards, a medieval Italian merchant community known for their banking activities.

Lombard Street became a hub for Lombard merchants who had migrated to London during the medieval period. They established themselves as moneylenders and money changers, conducting business and providing financial services in the area. Lombard Street became synonymous with banking and finance, attracting other moneylenders and traders.

Lombard Street consolidated its reputation as a financial center in the 16th century when several prominent banking institutions set up offices there. One notable example was the Royal Exchange which was established in the 16th century as a hub for commerce and banking. It became a symbol of London’s growing financial power.

The Great Fire of London in 1666 also had a significant impact on Lombard Street. The fire destroyed many buildings in the area, including the original Royal Exchange. It was rebuilt, however, and the area continued to flourish as a financial district.

Where Is the Financial Hub of the U.K.?

The financial hub of the U.K. is primarily centered in the City of London or “the City.” It’s often referred to as the Square Mile.

What Is the Most Famous Financial District?

The most famous financial district globally is arguably Wall Street, located in Lower Manhattan in New York City in the United States.

What Are the Big Five Banks in London?

London’s “Big Five” banks are HSBC Holdings plc (HSBC), Barclays plc (Barclays), Lloyds Banking Group plc (Lloyds), NatWest Group plc, and Standard Chartered plc (Standard Chartered).

The Bottom Line

London’s financial areas include Canary Wharf, the Square Mile, and Lombard Street.

Canary Wharf is a modern district in the East End, characterized by impressive skyscrapers and serving as a global finance and commerce hub. The Square Mile, also known as the City of London or “the City,” represents the historical and financial core, housing major institutions like the Bank of England and the London Stock Exchange. Lombard Street, situated within the City, has historical significance associated with banking.

These areas collectively exemplify London’s financial prowess, combining modern infrastructure, historical heritage, and a concentration of financial institutions.

These are some of the best-performing stocks in the health care sector over the past month

The health care sector is massive and incredibly varied, including companies that make medical equipment or drugs, those that offer medical services, and even those providing insurance in some cases. Within this sector, there are startups that are pre-revenue and working from quarter to quarter to launch an innovative product, major legacy service providers, and everything in between. Investors thus have many options to choose from when focused on health care. At the same time, though, the health care sector is highly complex, and investors are cautioned to familiarize themselves with the ins and outs of health care companies before launching an investment.

Key Takeaways

• Some of the best health care stocks for March 2025, based on 30-day returns, include GRAIL Inc. (GRAL), Akero Therapeutics Inc. (AKRO), and Solid Biosciences Inc (SLDB).
• The best-performing health care stocks in the last month returned at least 41.4%.
• An aging population and increasing medical needs are two factors contributing to massive growth in the health sector.

We examine several of the best health care stocks to watch for March 2025, based on highest 30-day percentage return. We include an explanation of the other factors in our screen below. All data are current as of Feb. 21, 2025.

Best Health Care Stocks to Watch in March 2025
Ticker	Company	Market Cap ($B)	Price ($)	30-Day Return (%)	P/E Ratio
GRAL	GRAIL Inc.	1.4	40.73	116.6	N/A
AKRO	Akero Therapeutics Inc.	3.9	51.84	102.5	N/A
SLDB	Solid Biosciences Inc.	0.4	5.78	77.9	N/A
CADL	Candel Therapeutics Inc.	0.5	11.63	73.6	N/A
ETNB	89bio Inc.	1.6	11.06	68.6	N/A
HIMS	Hims & Hers Health Inc.	10.8	49.28	65.8	114.0
SWTX	SpringWorks Therapeutics Inc.	4.4	58.25	62.9	N/A
LUNG	Pulmonx Corp.	0.4	8.96	46.4	N/A
AXSM	Axsome Therapeutics Inc.	6.7	137.75	43.2	N/A
GHRS	GH Research PLC	0.8	12.51	41.4	N/A

What to Know About the Health Care Sector

The health care sector was among the hardest hit by the COVID-19 pandemic and has yet to fully recover; the sector continues to face a significant labor shortage that has been exacerbated by ongoing inflation concerns. Significant elements of the way health care operations function—from a shift away from in-person medical appointments to changes in insurance and demand for new products, among many others—have forced long-time leaders in the space to reevaluate their offerings and presented openings for upstart firms to gain a foothold. Going forward, the health care sector will wrestle with a growing population of patients who are eligible for Medicaid and Medicare, opportunities presented by AI, and more.

One trend for investors to keep a close eye on is the ongoing popularity of GLP-1 agonists, a type of drug used to treat Type 2 diabetes and to help with weight loss. With about 1 billion people globally living with obesity, the potential market for these drugs is incredibly large. The two leading providers of these drugs are Novo Nordisk A/S (NVO) and Eli Lilly and Co. (LLY), but the market is far from settled.

How We Chose the Best Health Care Stocks

To screen for the best health care stocks this month, we looked at firms listed on either the Nasdaq or the New York Stock Exchange. To ensure we focused on established companies, we filtered out any companies with a share price below $5, with a minimum daily trading volume of under 100,000, and with a market capitalization below $300 million. From that subset of stocks, we ranked companies according to the highest 30-day percentage return.

Notably, all but one of the companies in our results had no P/E ratio. One of the most common reasons for a company to not have a P/E ratio is if it either took a loss or generated no earnings in the given time period, or in the prior-year period for comparison. This makes the calculation of a P/E ratio impossible. For clinical-stage pharmaceutical firms, many of which are pre-revenue or consistently post losses while developing their products, it is common to not have a P/E ratio until the launch of a significant drug product.

Health Care Stock Advantages and Disadvantages

National health expenditures reached $4.9 trillion in 2023, making the health care sector massive. A key benefit health care provides to investors is consistent demand. Because individuals will always have medical needs to be met, the overall demand for health products and services typically remains at least constant and tends to increase over time as populations grow older. Nationwide health care expenditures are expected to surge to $6.8 trillion by the year 2030.

Health care companies are enticing to investors because they are highly incentivized to use and create new technology, both to meet rising demand and to improve the affordability of care they can offer. This focus on innovation may mean that health care stocks offer the potential for short- and long-term gains.

It is common in the sector for individual companies to experience a significant breakout when an important new product is launched—such as a new medical device with broad applications or a blockbuster new drug—or even when clinical trial data is encouraging. Health care stocks often experience astronomical rallies during these moments.

On the other hand, there are some risks to investing in health care companies that investors should be aware of as well. One of the biggest risks is the size and scope of the sector. Due to the technical nature of the work of many health care companies, it can be difficult for outside investors to accurately assess the viability of a company or its products. Additionally, many companies in the space are heavily impacted by legislation, which can change and contribute to volatility.

Undoubtedly there are opportunities for major returns for investors looking to the health care sector. However, no one can predict how a company’s stock may perform. The companies above led the sector in our screen, but past performance is not a guarantee of future returns.

The Bottom Line

The health care sector is massive, complex, and rich with opportunities for investors willing to take the time to understand its ins and outs. Our screen favors companies in the pharmaceuticals space that have experienced strong returns in the last month, occasionally due to the success of a popular drug or other product. But just as some of these firms may rise rapidly, they may also fall just as precipitously, particularly if a promising new product ends up not working as expected.

The comments, opinions, and analyses expressed on Investopedia are for informational purposes only. Read our warranty and liability disclaimer for more info.

As of the date this article was written, the author does not own any of the above securities.

These are some of the best-performing stocks for companies involved in gold production.

Gold is one of the most famous of all safe-haven assets, traditionally included in portfolios as a hedge against inflation and market turbulence. Investors have many ways to access gold—as a physical commodity in the form of jewelry or bullion, through specialized exchange-traded funds (ETFs), and indirectly via investments in the stocks of companies that mine and produce gold.

Key Takeaways

• The top gold-mining companies for March 2025, based on 30-day returns, include SSR Mining Inc. (SSRM), Gold Fields Ltd. (GFI), and Wheaton Precious Metals (WPM).
• Investors looking for exposure to gold without making a direct investment in the commodity itself might consider gold-mining company stocks.
• The price of gold is roughly $2,952 per ounce, as the precious metal has repeatedly set all-time high records in recent weeks.

We explore the best gold stocks for investors to watch in March 2025, based on 30-day returns. Our screen focuses on mining companies that target gold, although many also include other precious metals. Below is a detailed explanation of the methodology we utilize to create our ranking of gold mining company stocks. All data are current as of Feb. 21, 2025.

Best Gold Stocks to Watch in March 2025
Ticker	Company	Market Cap ($B)	Price ($)	30-Day Return (%)	P/E Ratio
SSRM	SSR Mining Inc.	2.1	10.23	29.7	N/A
GFI	Gold Fields Ltd.	16.6	18.70	14.0	13.7
WPM	Wheaton Precious Metals Corp.	30.9	68.05	13.8	50.4
GOLD	Barrick Gold Corp.	31.6	18.30	13.7	15.6
AGI	Alamos Gold Inc.	9.5	22.69	12.4	34.5
DRD	DRDGOLD Ltd.	1.0	11.07	11.7	10.2
AU	AngloGold Ashanti PLC	15.9	31.64	10.0	387.8
AEM	Agnico Eagle Mines Ltd.	48.3	96.10	7.5	26.7
NEM	Newmont Corp.	51.6	45.33	6.6	15.5
FNV	Franco-Nevada Corp.	26.7	138.69	5.5	N/A

What to Know About Investing in Gold

The price of gold was about $2,952 per ounce as of late February 2025. The metal has repeatedly set new records in recent weeks. Ongoing inflation concerns, market instability due to domestic and international geopolitical tensions, and a shifting interest rate environment in 2024 and early 2025 all helped to push gold higher, as investors sought out a stable place to park assets.

While investors typically look to avoid entering a new position while it’s close to a record high, there are many reasons why it may still pay to invest in gold. First, there is no guarantee that gold will fall from its high price point. Further, it can still offer a hedge against inflation, despite the fact that gold is quite expensive. But while gold does not offer some of the benefits of stock investments—such as the prospect of dividend payments—investors looking for indirect access can find it by looking to companies involved in mining and producing this precious metal.

How We Chose the Best Gold Stocks

In our screen, we considered gold-mining companies with shares trading on the Nasdaq or the New York Stock Exchange. We excluded firms with stock prices under $5, with less than 100,000 in average daily trading volume, or with a market capitalization under $300 million. These measures help ensure that our list includes only well-established companies. Finally, we ranked all remaining gold mining companies based on highest 30-day return and excluded any with a negative return during that period.

Following this search, we found a number of gold mining companies with 30-day returns as high as 29.7%. Notably, some of the companies on this list do not have a P/E ratio. This is sometimes the result of a company experiencing net losses in the current and/or prior-year quarter, making it impossible to calculate this metric.

Gold Advantages and Disadvantages

Before investing in gold mining companies, investors should consider a few important benefits and risks. Advantages of these firms may include their potential to be a leveraged play on gold. As the price of gold rises, the share prices of these companies may rise as well—and they may experience even higher returns thanks to their crucial role in producing gold for physical investment. Rising gold prices can also lead to significant capital gains for gold mining firms when their profits increase as well. Another benefit of gold mining firms is their higher liquidity compared to physical gold. Lastly, investing in bullion, jewelry, or other physical gold products also requires paying for transportation and storage costs—not required when investing in gold mining stocks—and carries the risk of loss or theft.

One of the key potential disadvantages of an investment in a gold-mining stock is that most of these companies do not focus exclusively on gold. This means they are not pure-play gold investments and that they are also subject to fluctuations in other minerals covered by the operations as well. Mining firms tend to have operations scattered around the world in many different locations, so regulations can vary dramatically from one site to another. Monitoring the impact of these regulations can be difficult for investors. Of course, mining firms are also exposed to many other risks and factors that may separate their performance from that of physical gold. And when gold rises, there is no guarantee that the price of shares of a mining firm will also climb.

The stocks listed above are at the top of our list for this month. However, past performance is not a guarantee of any future returns.

The Bottom Line

For investors seeking an alternative to physical gold investments, gold-mining stocks offer an alternative. These companies may provide some degree of indirect access to the gold market. While their prices may correlate with the price of physical gold, that’s not always the case. Still, for some investors, the opportunity to avoid the logistical considerations, liquidity limitations, and other concerns associated with a physical investment in gold makes gold-mining firms a worthwhile alternative.

The comments, opinions, and analyses expressed on Investopedia are for informational purposes only. Read our warranty and liability disclaimer for more info.

As of the date this article was written, the author does not own any of the securities listed above.

These are some of the penny stocks with interesting charts using technical analysis that performed well over the past 30 days

Once a stock price is below $5 per share, it is categorized as a penny stock. Frequently, but not always, penny stocks have small market capitalizations and are prone to high volatility due to low liquidity and trading volumes. Penny stocks can, therefore, provide an opportunity for large, quick gains because a small movement in the price of a penny stock can produce a large percentage gain. But they also carry significant risks compared to more established stocks. To guard against the risks associated with investing in penny stocks, the stocks discussed in this article have a minimum price and volume criteria, along with clear chart patterns and other technical analysis indicators.

Below is an analysis of developing bullish patterns in penny stocks for March 2025, pulled from a screen showing positive one-month performance, a minimum price of $1.50, and 30-day average daily volume of 200,000 shares.

All charts and data are current as of Feb. 25, 2025.

Enel Chile S.A. (ENIC)

• Price: $3.47
• 30-day return: 16.1%
• Average daily trading volume: 482,700
• Exchange: New York Stock Exchange

A bull wedge breakout triggered in the stock of Enel Chile S.A. (ENIC) in December. It has the potential to eventually reach higher targets. In the short term, the stock is extended, but given the bullish potential indicated by the wedge breakout, short-term weakness can be used to identify new bullish setups. Prior to the bearish correction, which took the form of a falling wedge, the stock rose by $2.92, or 297%, over 12 months. This shows that it has the potential to see another sharp advance following the wedge breakout. There is also additional technical evidence supporting higher prices. The wedge formed largely on support of the 200-week moving average (blue) and the long-term downtrend line. Moreover, following the initial breakout, support was successfully tested at the 50-week moving average (orange), and the 20-week moving average recently crossed above the 50-week line.

Gossamer Bio, Inc. (GOSS)

• Price: $1.26
• 30-day return: 35.5%
• Average daily trading volume: 1,610,500
• Exchange: Nasdaq

Gossamer Bio, Inc. (GOSS) is a biopharmaceutical company focused on pulmonary arterial hypertension. The stock of the company has been working on a bottoming process for more than a year and it is starting to show signs of strength. The neckline or mid-section of the pattern is at $1.60. A decisive breakout above that price level triggers a breakout of the bottoming pattern. Recently, a trendline breakout triggered before the stock hit resistance at $1.55, a sign of strength. Volatility had been declining as the price range compressed following a second bottom in June 2024. The convergence of moving averages beginning in April 2024 is representative of this type of price behavior. Very low volatility can lead to sharp moves, and a stock will decline only so much before volatility expands. The stock looks like it is getting closer to a bull breakout on a rally above $1.60.

Tuya Inc. (TUYA)

• Price: $3.53
• 30-day return: 54.8%
• Average daily trading volume: 3,260,800
• Exchange: New York Stock Exchange

Tuya Inc. (TUYA) is a Chinese enterprise software company with an Internet of Things (IoT) cloud platform. The company’s stock recently broke out of a multi-year sideways consolidation bottoming pattern before hitting resistance at $4.63. That rally triggered a continuation of the developing bull trend as a higher swing high was reached. Although the stock is overbought in the near term, a continuation of the bearish correction should lead to a new bullish setup at lower prices. Key potential support may be seen at the prior trend high of $3.10 or a prior interim swing high of $2.50. Nonetheless, a $2.33 or 302% rapid advance prior to the sideways correction, shows the potential of the current advance following a retracement.

Rapid Micro Biosystems, Inc. (RPID)

• Price: $2.82
• 30-day return: 107%
• Average daily trading volume: 315,500
• Exchange: Nasdaq

Rapid Micro Biosystem, Inc. (RPID) is a life sciences technology company in the medical devices industry. Its stock recently completed a sharp advance of $3.17, or 365%, in only eight weeks. The rally triggered a bullish reversal from a consolidation bottom of roughly 19 months. Notice that the breakout in January was proceeded by a bull flag type pattern and successful test of support, first at the 50-day moving average (orange) and then the 20-day moving average (purple). Following a bearish retracement the stock may set up for another bull run. There has only been one sharp rally off the bottom, and the bull trend is potentially still in its infancy. 

Xunlei Limited (XNET)

• Price: $2.77
• 30-day return: 17.9%
• Average daily trading volume: 212,500
• Exchange: Nasdaq

The stock of Xunlei Limited (XNET) broke out of a large rectangle consolidation pattern in late January before eventually finding resistance at a high of $3.75. That high completed a sharp rally of $1.85, or 97.2%, before the stock began a bearish retracement. The bearish retracement is the first pullback following a strong breakout of a long-term sideways pattern, and therefore, the stock may have a chance at another rally once the retracement is complete.

Notice the $1.38 or 162.7% sharp initial rally off the trend low in October 2022. Besides the strength indicated by the pattern breakout, the 200-week moving average was reclaimed during the recent advance for the first time since April 2021. Subsequently, the 20-week moving average confirmed strength by crossing above the 200-day line after being successfully tested as support for the prior few months.  

What to Know About Penny Stocks

Many penny stocks trade via over-the-counter (OTC) markets, which means they have minimal regulatory oversight and little analyst coverage, making it difficult to access accurate company information.

However, the penny stocks we’ve identified in this article are all listed on the New York Stock Exchange or Nasdaq, which means they are subject to the same listing requirements as any other company on these exchanges. These requirements are intended to ensure that only high-quality securities are available for trading on the exchange.

While penny stocks are a riskier investment than established stocks due to their volatility, the potential for high returns is attractive to some investors.

How We Chose the Best Penny Stocks

To screen for penny stocks with interesting chart patterns and other technical analysis indicators, we used the following criteria. Stocks had to have positive one-month performance and be priced under $5.00. To help improve the reliability of the chart patterns, the stocks had to have a minimum price of $1.50 and an average 30-day trading volume of at least 200,000. The stock also had to have at least 24 months of trading history.

The charts were also reviewed for bullish patterns, including breakouts above trendlines, key resistance, and moving averages. Candlestick patterns were also considered, as we looked for signs that pointed to a bullish trend reversal or indications that a trend was strengthening. Still, it’s important to remember that past performance is not a guarantee of future performance.

Penny Stock Advantages and Disadvantages

The low price of penny stocks offers investors high potential for growth, and they can give smaller businesses a platform to access funding. But while these stocks can bring investors significant gains, they also carry the risk of significant losses. There are greater risks associated with investing in penny stocks than with more established stocks.

Penny stocks usually lack liquidity. It can also be difficult to find solid public information about penny stock companies that trade over the counter. Given the additional risks, penny stocks are not suitable for all investors, especially those with a low risk tolerance.

Another disadvantage is that the price patterns may take longer to unfold and single-position drawdowns can be larger than normal, given the higher potential volatility in low-priced stocks.

There are ways to mitigate the added risks, starting with raising the minimum price and average trading volume and selecting penny stocks that trade on the NYSE or Nasdaq. Overall portfolio risk can be contained by allocating only a small amount of total capital to the penny stock market.

By carefully screening, watching, and waiting for price patterns to unfold, investors can access a market environment that has the potential for large gains in a relatively short period of time. But that depends on entering a position at the right time.

The Bottom Line 

Penny stocks have the potential to sometimes see sharp multi-week or month rallies that, on a percentage basis, exceed expectations. They can present opportunities for investors that are difficult to find otherwise. This article features five interesting charts of penny stocks that had advanced during the prior 30 days and showed upside potential, given the presented technical analysis.

The comments, opinions, and analyses expressed on Investopedia are for informational purposes only. Read our warranty and liability disclaimer for more info.

As of the date this article was written, the author does not own any of the securities listed above.

ETFs can help investors diversify their portfolio through a single investment product

Exchange-traded funds (ETFs) are investment funds that trade on stock exchanges, similar to individual stocks, and typically track an index, sector, commodity, or asset class. They offer investors diversification, as a single ETF can hold a broad mix of securities, reducing risk compared to investing in individual stocks. ETFs also tend to have lower expense ratios than actively managed mutual funds and provide liquidity, allowing investors to buy and sell shares throughout the trading day at market prices.

Key Takeaways

• Leading ETFs offer investors an opportunity to broadly diversify their holdings through a single investment with a low expense ratio and/or higher returns compared to competitors.
• We screened for the equity, bond, fixed income, commodities, and currency ETFs providing the highest one-month total returns for March 2025.
• These funds include CQQQ, ZROZ, ELD, UNG, FXY

Below, we outline the top equity, bond, fixed income, commodities, and currency ETFs that generated the highest returns over the last month. We have excluded leveraged and inverse ETFs, as well as funds with less than $50 million in assets under management (AUM).

All data are current as of Feb. 25, 2025.

Equity ETF with the Best 1-Month Return: Invesco China Technology ETF (CQQQ)

• One-month performance: 26%
• Expense Ratio: 0.65%
• Annual Dividend Yield: 0.23%
• 30-Day Average Daily Volume: 674,130
• Assets Under Management (AUM): $975 million
• Inception Date: Dec. 8, 2009
• Issuer: Invesco

The Invesco China Technology ETF (CQQQ) tracks the FTSE China Incl A 25% Technology Capped Index, investing at least 90% of its assets in Chinese technology stocks. The ETF provides exposure to China’s tech sector and is rebalanced quarterly. As of Feb. 24, its biggest holdings were in shares of Tencent Holdings Ltd, PDD Holdings Inc ADR (PDD), and Meituan.

Bond ETF with the Best 1-Month Return: PIMCO 25+ Year Zero Coupon US Treasury Index Exchange-Traded Fund (ZROZ)

• One-month performance: 4.6%    
• Expense Ratio: 0.15%
• Annual Dividend Yield: 4.54%
• 30-Day Average Daily Volume: 342,904
• Assets Under Management (AUM): $1.54 billion
• Inception Date: Oct. 30, 2009
• Issuer: Allianz Investment Management LLC

This fund seeks to closely track the total return of the BofA Merrill Lynch Long Treasury Principal STRIPS Index before fees and expenses. It provides exposure to long-term U.S. Treasuries, offering yield and duration benefits while potentially reducing trading costs.

Fixed Income ETF with the Best 1-Month Return: WisdomTree Emerging Markets Local Debt Fund (ELD)

• One-month performance: 3.9%
• Expense Ratio: 0.55%
• Annual Dividend Yield: 5.5%
• 1 Month Avg. Volume: 8,317
• Assets Under Management (AUM): $63.6 million
• Inception Date: Aug. 9, 2010
• Issuer: WisdomTree, Inc.

The WisdomTree Emerging Markets Local Debt Fund (ELD) aims to generate high total returns through income and capital appreciation by investing in locally denominated debt from emerging market countries. The ETF’s constituent countries include Brazil, Chile, Colombia, Mexico, Peru, Poland, Romania, Russia, South Africa, Turkey, China, Indonesia, Malaysia, South Korea, and Thailand.

Commodities ETF with the best 1-Month Return: United States Natural Gas Fund LP (UNG)

• One-month performance: 20.5%
• Expense Ratio: 1.06%
• Annual Dividend Yield: N/A
• 30-Day Average Daily Volume: 8,098,913
• AUM: $776.7 million
• Inception Date: April 18, 2007
• Issuer: Marygold

The United States Natural Gas Fund (UNG) is an ETF designed to closely track the daily price movements of natural gas using its Benchmark Futures Contract, primarily the near-month natural gas futures trading on the NYMEX. UNG had a strong one-month performance, as natural gas prices have continued to rally in the face of colder-than-anticipated temperatures across the U.S. and
electricity generation demand from AI.

Currency ETF with the Best 1-Month Return: Invesco Currency Shares Japanese Yen Trust (FXY)

• One-month performance: 4.67% 
• Expense Ratio: 0.4% 
• Annual Dividend Yield: N/A
• 30-Day Average Daily Volume: 204,370 
• AUM: $441 million 
• Inception Date: Feb. 12, 2007
• Issuer: Invesco

The Invesco Currency Shares Japanese Yen Trust (FXY) is an ETF designed to track the price of the Japanese yen through physical yen holdings. The yen serves as Japan’s national currency and is managed by the Bank of Japan, the country’s central bank. The Yen has been rallying recently based on speculation that the Bank of Japan could raise interest rates twice more this year if inflation continues to be elevated.

How We Chose the Best ETFs

We selected the best ETFs across five areas of focus—equities, bonds, fixed-income, commodities, and currencies—utilizing a screener by VettaFi. In each case, we sorted ETFs according to the specified category and ranked them by highest one-month returns. We then filtered out any ETFs that employ a leveraged or inverse strategy, as well as any with less than $50 million in assets under management. Finally, for currencies ETFs, we excluded any funds focused on cryptocurrencies from our screen.

How to Invest in ETFs

To invest in ETFs, start by researching and selecting an ETF that aligns with your financial goals, risk tolerance, and investment strategy—whether it tracks a broad market index, a specific sector, or a commodity. Open a brokerage account with a platform that offers ETF trading, then place an order
just like you would for a stock. Consider factors such as expense ratios, liquidity, and tracking accuracy to ensure you’re getting the best value for your money. Depending on your time horizon and risk tolerance, ETFs typically require minimal maintenance and are often considered long-term, buy-and-hold investments.

The Bottom Line

ETFs are versatile and cost-effective investment options that provide diversification, liquidity, and tax efficiency, making them ideal for both new and experienced investors. With minimal maintenance required, they offer a simple way to gain exposure to broad markets or specific sectors while managing risk.

The comments, opinions, and analyses expressed on Investopedia are for informational purposes only. Read our warranty and liability disclaimer for more info.

As of the date this article was written, the author does not own any of the above ETFs.

These are the top AI stocks based on best value, fastest growth, and most momentum.

February was a turbulent month for AI stocks, driven by the emergence of Chinese startup DeepSeek, which launched an AI assistant aiming to compete with OpenAI and challenge assumptions about the cost and infrastructure required to develop competitive AI models. That triggered a sharp pullback in Nvidia (NVDA) shares.

Microsoft (MSFT) also announced the cancellation of planned AI data center leases, reinforcing speculation of a slowdown in AI demand. Meanwhile, Palantir Technologies (PLTR), which had previously surged on strong AI-driven momentum, tumbled 27% from its all-time high following announced government spending.

Below is an analysis of the top AI stocks for March 2025, screened for best value, fastest growth, and most momentum. All stocks are listed on the Nasdaq or New York Stock Exchange.

All data are current as of Feb. 24, 2025.

Best-Value AI Stocks

Value investing is about finding stocks trading below their true worth, with the expectation that the market will eventually correct the mispricing and the stock price will rise. Investors often use price-to-earnings (P/E) ratio to find stocks that are undervalued, as a lower P/E ratio can indicate that a company is valued at less than its fundamental value.

However, it may take multiple quarters or years before a turnaround materializes.  Some stocks may also remain cheap for a reason, falling into a “value trap,” continuing to underperform despite appearing undervalued. Moreover, the P/E ratio should not be viewed in isolation. Investors should ask why a stock is trading at a discount to its peers and whether that gap is likely to close due to a business recovery, or the market recognizing the value opportunity.

Best-Value AI Stocks
	Price ($)	Market Capitalization ($B)	12-Month Trailing P/E Ratio
Yiren Digital Ltd. (YRD)	6.76	0.66	2.4
i3 Verticals, Inc. (IIIV)	26.83	0.9	5.7
Hut 8 Corp (HUT)	16.6	1.6	8.3

• Yiren Digital Ltd: A fintech company based in China, Yiren Digital operates a financial marketplace connecting investors with borrowers. The company offers payment processing, loan services, insurance products, and ecommerce products. On Feb. 18, Yiren announced it had integrated DeepSeek’s AI technology to enhance operational efficiency, streamline workflows, and improve customer interactions across financial and lifestyle services in China.
• i3 Verticals, Inc: i3 Verticals specializes in developing and acquiring software solutions for the public sector and health care markets. Currently, i3 boasts a number of AI solutions for different industries such as retail, restaurants, and commercial applications. For instance, i3’s intelligent video surveillance system identifies objects, tracks customer behavior, and integrates with point-of-sale data to refine operational strategies for the retail channel.
• Hut 8 Corp. Hut 8 is an energy infrastructure operator and Bitcoin miner with operations across North America, primarily in Canada, New York, and Texas. While primarily a Bitcoin-mining operation, Hut 8 currently has 3.4 megawatts of capacity dedicated to high-performance computing.

Fastest-Growing AI Stocks

Growth investors look for companies with increasing revenue and earnings per share (EPS), believing these metrics signal strong business fundamentals and potential for value appreciation. However, relying on just one of these indicators can present an incomplete picture, as factors like tax law changes, mergers, or one-time gains can distort the numbers.

For a more balanced assessment, we screen AI growth stocks by looking at the most recent year-over-year percentage growth for both revenue and EPS, giving each equal weighting. We also excluded companies with growth rates in either category of 1,000% or more on the grounds that these are likely outliers.

Fastest-Growing AI Stocks
	Price ($)	Market Cap ($B)	EPS Growth (%)	Revenue Growth (%)
Pinterest, Inc (PINS)	36.95	25	828	18
Dynatrace, Inc. (DT)	59	17.7	735	19.5
Innodata, Inc. (INOD)	59.2	1.7	501	127

• Pinterest, Inc: With over half a billion users worldwide, Pinterest is a visual search and discovery platform that aims to help people find inspiration, curate ideas, and shop for products. An early adopter of AI, Pinterest acquired THE YES in June 2022, an AI-powered shopping platform that delivers a personalized feed to users based on their input on brand, style, and size.
• Dynatrace, Inc: Dynatrace provides AI-powered solutions to help businesses monitor, analyze, and optimize their digital ecosystems, allowing customers to detect issues in real time and improve system performance. Dynatrace has expanded its AI engine, enabling organizations to predict and prevent IT issues before they occur.
• Innodata, Inc: Innodata is a global data engineering company that offers services in data curation, transformation, and large language model data sets, as well as consulting along the AI value chain. Driven by strong AI demand, the company reported a 96% increase in revenues for fiscal year 2024 compared to 2023, while deepening its partnership with big tech customers.

AI Stocks With the Most Momentum

Momentum investing is a strategy that seeks to capitalize on existing market trends by investing in stocks that have recently outperformed their peers or the broader market. The core idea is that stocks on an upward trajectory are likely to continue rising as long as the fundamental drivers
behind their growth remain intact.

The momentum strategy has become synonymous with AI, owing to the fast growth of this sector. AI names can generate returns that far outpace established tech names, driven mostly by investor sentiment. While it’s a viable strategy for those with a higher risk tolerance, investors should also focus on the company’s underlying financials to ensure the anticipated growth prospects will materialize.

Here are the AI stocks with the highest total return in the last 12 months.

	Price ($)	Market Cap ($B)	12-Month Trailing Total Return (%)
Quantum Computing, Inc. (QUBT)	6.9	0.94	747
VNET Group, Inc. (VNET)	13.3	3.9	746
Kingsoft Cloud Holdings Ltd. (KC)	18.5	5.2	491

• Quantum Computing, Inc: Quantum Computing is an integrated photonics and quantum technology company focused on developing accessible and affordable quantum computing solutions. Company CEO William McGann recently highlighted the company’s plans to commercialize its technology, advance its thin-film lithium niobate (TFLN) chip fabrication facility, and expand strategic partnerships in AI.
• VNET Group, Inc: VNET serves over 7,500 enterprise customers across more than 30 cities in China, offering data center hosting, cloud solutions, and internet security services. The company recently announced strong third-quarter 2024 reports, driven by rising AI demand. 
• Kingsoft Cloud Holdings, Ltd: Kingsoft is a leading cloud service provider in China. In its third quarter 2024 earnings report, Kingsoft announced the continued expansion of its AI business, which now accounts for 31% of the company’s public cloud revenues.

Advantages of AI Stocks

Mass Disruption

AI is a rapidly evolving sector with applications across nearly every industry, from health care to finance and cybersecurity. As adoption accelerates, AI companies have significant room for revenue expansion and market dominance. Furthermore, ongoing advancements in research and development are enhancing AI models’ reasoning and adaptability, unlocking even greater disruptive potential.

Innovation

AI-driven automation enhances efficiency, leading to reduced costs for businesses. Companies leading in AI development can secure long-term competitive advantages, making them attractive investments in both the short and long term.

Investor Enthusiasm

AI stocks often experience strong investor enthusiasm, driving rapid price appreciation. With ongoing advancements in machine learning, automation, and generative AI, market sentiment remains highly bullish, fueling momentum-driven gains.

Disadvantages of AI Stocks

High Valuations and Market Speculation

Many AI stocks trade at high valuations due to investor enthusiasm and growth expectations. While the AI sector has strong long-term potential, some companies may be overvalued, leading to the risk of significant price corrections. Speculative investments, particularly in early-stage AI companies, can result in inflated valuations that may not be supported by actual revenue or profitability.

Regulatory Risks

AI technology is increasingly facing scrutiny from governments and regulatory bodies worldwide. Concerns over data privacy, algorithmic bias, job displacement, and national security risks could lead to stricter regulations that impact operations and growth prospects. The legal landscape around AI is still in its early stages, and new laws around transparency, intellectual property rights, and ethical AI development are being fleshed out.

Stiff Competition

The AI industry is highly competitive, with major players such as Alphabet (GOOGL), Microsoft (MSFT), Nvidia (NVDA), and OpenAI continuously advancing their technologies. This rapid pace of innovation means that companies that fail to stay ahead may become obsolete. Additionally, emerging AI startups such as DeepSeek can disrupt established players seemingly overnight, making it difficult for investors to predict long-term trends.

The Bottom Line

AI stocks offer significant growth potential, fueled by rapid technological advancements and strong investor enthusiasm. However, high valuations, regulatory uncertainties, and intense competition pose risks that investors must carefully navigate. While AI remains a compelling long-term investment, careful scrutiny of a company’s financials and thorough risk management are essential to avoid speculative bubbles and hype.

The comments, opinions, and analyses expressed on Investopedia are for informational purposes only. Read our warranty and liability disclaimer for more info.

As of the date this article was written, the author does not own any of the above securities.

February saw a sharp selloff in leading tech names, with Nvidia (NVDA) pulling back as competition intensified, particularly from Chinese startup DeepSeek’s new AI chatbot, which aims to challenge OpenAI’s dominance. Meanwhile, shares of Palantir Technologies (PLTR) tumbled 27% from all-time highs following announcements of federal budget cuts, as government contracts account for 40% of the company’s revenue.

The Technology Select Sector SPDR Fund (XLK) ended the month flat, as the broader AI selloff and economic uncertainty weighed on the sector, driven by tariff threats between the U.S. and its trading partners.

Below is an analysis of the top tech stocks for March 2025, screened for best value, fastest growth, and most momentum. All stocks are listed on the Nasdaq or New York Stock Exchange. We excluded stocks with a price under $5, an average daily trading volume of less than 100,000, and a market capof less than $300 million.

All data are current as of Feb. 25, 2025.

Best-Value Tech Stocks

Value investing is about finding stocks trading below their true worth, with the expectation that the market will eventually correct the mispricing. Investors often use price-to-earnings (P/E) ratio, looking for stocks with a low P/E ratio to uncover value. Typically, a lower P/E ratio signals an undervalued stock because it means the company is valued less than its fundamental value. These stocks may offer a stronger return after the market adjusts.

However, bargain hunters must exercise patience, as it may take multiple quarters (or years) before a turnaround materializes. Some stocks may also remain cheap for a reason, falling into a “value
trap,” continuing to underperform despite appearing undervalued. Moreover, the P/E ratio should not be viewed in isolation. Investors should ask why a stock is trading at a discount to its peers and whether that gap is likely to close due to a business recovery, or the market recognizing the value
opportunity.

Best-Value Tech Stocks
	Price ($)	Market Capitalization ($B)	12-Month Trailing P/E Ratio
Yiren Digital Ltd. (YRD)	6.76	0.66	2.4
DoubleDown Interactive Co., Ltd. (DDI)	9.79	0.5	4
I3 Verticals, Inc. (IIIV)	26.83	0.9	5.7

• Yiren Digital Ltd: A fintech company based in China, Yiren Digital operates a financial marketplace connecting investors with borrowers. The company offers payment processing, loan services, insurance products, and ecommerce products. On Feb. 18, Yiren announced it had integrated DeepSeek’s AI technology to enhance operational efficiency, streamline workflows, and improve customer interactions across financial and lifestyle services in China.
• DoubleDown Interactive Co., Ltd Double Down is a gaming company that makes apps for mobile and desktop players. Their three most popular products are DoubleDown Casino, DoubleDown Fort Knox, and DoubleDown Classic Slots. The company ended fiscal year 2024 with 1.36 million average monthly active users, down from 1.75 million the year prior, though average revenue per user increased to $1.30 from $1.09 across the same time period. 
• i3 Verticals, Inc: i3 Verticals specializes in developing and acquiring software solutions for the public sector and health care markets. During its first quarter 2025, i3 saw annualized recurring revenues grow 7.6% compared to first quarter 2024.

Fastest-Growing Tech Stocks

Growth investors look for companies with increasing revenue and earnings per share (EPS), believing these metrics signal strong business fundamentals and potential for value
appreciation. However, relying on just one of these indicators can present an incomplete picture, as factors like tax law changes, mergers, or one-time gains can distort the numbers.

While growth investing offers the potential for high returns, it also comes with risks, such as inflated valuations, market volatility, and companies failing to sustain rapid expansion. Investors should
be cautious of excessive hype, unsustainable growth rates, and external economic factors that could impact performance. For a more balanced assessment, we employ a dual-metric approach. We equally weight the most recent year-over-year (YOY) percentage growth in both revenue and earnings per share (EPS), giving each consideration to provide a clearer view of each company’s true growth trajectory. In addition, we exclude companies that exhibit extraordinarily high growth rates—specifically, those with quarterly growth exceeding 1,000%—since these are outliers not likely on a sustainable trendline.

Fastest-Growing Tech Stocks
	Price ($)	Market Cap ($B)	EPS Growth (%)	Revenue Growth (%)
Pinterest, Inc (PINS)	36.95	25	828	18
Sportradar Group AG (SRAD)	21.35	6.4	795	28
Dynatrace, Inc. (DT)	59	17.7	735	19.5

• Pinterest, Inc: With over half a billion users worldwide, Pinterest is a visual search and discovery platform that allows people to find inspiration, curate ideas, and shop for products. 2024 was a banner year for Pinterest, with the company achieving its first $1 billion revenue quarter and a record 553 million monthly active users.
• Sportradar Group AG: Sportradar Group AG is a global sports technology company that provides data analytics, betting solutions, and media services to sports organizations, media outlets, and sportsbooks. On Feb. 7, Sportradar announced a long-term extension and expansion of their partnership with Major League Baseball to 2032, with MLB acquiring an equity stake in Sportradar.
• Dynatrace, Inc: Dynatrace provides AI-powered solutions to help businesses monitor, analyze, and optimize their digital ecosystems, allowing customers to detect issues in real time and improve system performance. Dynatrace has expanded its AI engine to shift enterprises from reactive AI solutions to preventive operations, enabling organizations to predict and prevent IT issues before they occur.

Tech Stocks With the Most Momentum

Momentum investing is a strategy that seeks to capitalize on existing market trends by investing in stocks that have recently outperformed their peers or the broader market. The core idea is that stocks on an upward trajectory are likely to continue rising as long as the fundamental drivers
behind their growth remain intact.

This strategy is particularly popular in the tech sector, where innovation, product launches, and market disruptions often lead to rapid stock price appreciation. However, investors must carefully monitor stock valuations, as fast-rising stocks often outpace their fundamentals. When valuations become overstretched, they can form speculative bubbles that are vulnerable to sharp selloffs if market sentiment shifts. Here are the tech stocks with the highest total return in the last 12 months.

Tech Stocks With the Most Momentum
	Price ($)	Market Cap ($B)	12-Month Trailing Total Return (%)
Red Cat Holdings, Inc. (RCAT)	7	0.6	912
Quantum Computing, Inc. (QUBT)	6.9	0.94	747
VNET Group, Inc. (VNET)	13.3	3.9	746

• Red Cat Holdings, Inc: Red Cat is a drone technology company specializing in integrating robotic hardware and software for military, government, and commercial applications. On Feb. 12, Red Cat announced that it had raised up to $20 million in debt financing and applied for $58 million in debt financing from the Department of Defense Office of Strategic Capital.
• Quantum Computing, Inc: Quantum Computing is an integrated photonics and quantum technology company focused on developing accessible and affordable quantum computing solutions. Quantum Computing CEO William McGann recently highlighted the company’s plans to commercialize its technology, open a facility for making thin film lithium niobate (TFLN) chips, and expand strategic partnerships in AI.
• VNET Group, Inc.: VNET serves over 7,500 enterprise customers across more than 30 cities in China, offering data center hosting, cloud solutions, and internet security services. The company recently announced a strong third quarter of 2024 thanks to the success of its data center hosting business, driven by rising AI demand.

Advantages of Tech Stocks

Growth Potential

Tech companies, especially those in emerging sectors like artificial intelligence, cloud computing, and cybersecurity, often experience rapid revenue and earnings growth. Many tech firms have scalable business models that allow them to expand globally, while maintaining high gross margins.

Innovation

The tech industry is constantly evolving, with companies pioneering groundbreaking innovations that reshape entire industries. Investors in leading tech firms can benefit from major technological shifts, such as AI, and automation, creating long-lasting competitive advantages.

Recurring Revenues

Many tech companies, particularly those in software, cloud computing, and digital services, operate on subscription-based or recurring revenue models, ensuring more stable and predictable cash flows. These models provide businesses with greater revenue visibility, reduce dependence on one-time sales, and enhance customer retention through long-term contracts and service integrations. Additionally, recurring revenue helps mitigate economic downturns by offering consistent income streams, while also enabling companies to reinvest in research, development, and expansion

Disadvantages of Tech Stocks

Volatility

Tech stocks are known for their high volatility because rapid technological changes and competitive pressures can lead to significant price fluctuations. They often carry high valuations based on growth expectations, making them susceptible to market corrections if they fail to meet these
projections. Furthermore, regulatory challenges and geopolitical tensions can impact the sector, introducing additional risks and uncertainties for investors.

Valuation Risks

Owing to their high growth potential, many tech companies trade at high earnings or revenue multiples, making them susceptible to overvaluation. If growth expectations do not materialize, these stocks can experience sharp declines, leading to potential losses for investors. Moreover,
early-stage tech companies often allocate a significant portion of their capital to staffing and marketing to sustain their high growth rates. As a result, they tend to remain unprofitable in their initial stages, often relying on outside capital to fund expansion, despite achieving higher gross margins than companies in non-technology sectors.

Regulatory and Competitive Challenges

The tech industry faces increasing scrutiny from regulators on issues like data privacy,
antitrust concerns, and cybersecurity. Tech giants such as Meta Platforms (META)
and Alphabet Inc (GOOGL) are no strangers to regulatory probes and fines.  Additionally, competition is fierce, with companies constantly innovating to maintain their market position, which can erode profitability and market share over time.

The Bottom Line

Tech stocks offer compelling investment opportunities due to their high growth potential, continuous innovation, and recurring revenue models, making them a dominant force in the global economy. AI is set to be a major driver of technological advancements in 2025, with the potential to
disrupt all major industries. However, the sector can be volatile, with regulatory scrutiny expected to increase along with innovation. Investors should exercise caution, ensuring that even the most promising tech stocks are evaluated critically to avoid getting caught up in market bubbles or
speculative hype.

The comments, opinions, and analyses expressed on Investopedia are for informational purposes only. Read our warranty and liability disclaimer for more info.

As of the date this article was written, the author does not own any of the above securities.

VWAGY, TM, and STLA lead the 10 biggest car companies list

Reviewed by Gordon Scott
Fact checked by Vikki Velasquez

The automotive industry is a crucial part of the global economy, producing vehicles that efficiently transport people and goods within nations and across entire regions. These companies manufacture cars, trucks, vans, and sport utility vehicles (SUVs). Some even produce motorcycles, all-terrain vehicles (ATVs), and commercial vehicles like transport trucks and buses.

The biggest auto manufacturers have a large global footprint, selling vehicles to consumers and businesses worldwide. These big companies are mainly headquartered in just a few countries that lead the industry; however, the list of the 10 biggest also includes car companies from other countries.

We look in detail below at the 10 biggest car companies by trailing 12 months (TTM) revenue as of February 2025. Some companies outside the United States report profits semiannually instead of quarterly, so the TTM data may be older than it is for companies that report quarterly. This list is limited to publicly traded companies in the U.S. or Canada, either directly or through American depositary receipts (ADRs).

Important

Some of the stocks below are only traded over the counter (OTC) in the U.S., not on exchanges. This may be because they are foreign companies that do not have sponsored ADRs on traditional exchanges. As a result, trading OTC stocks often carry higher trading costs than trading stocks on exchanges. Additionally, these stocks may be subject to foreign exchange fluctuations. This can lower or even outweigh potential returns.

1. Volkswagen AG (VWAGY)

• Revenue (TTM): $324.46 billion
• Net Income (TTM): $12.25 billion
• Market Cap: $55.2 billion
• 1-Year Return (TTM): -24.2%
• Exchange: OTC

Volkswagen (VWAGY) is a Germany-based multinational automotive manufacturing company. It develops and produces passenger cars, trucks, and light commercial vehicles such as buses. Vehicle models include the Tiguan, Golf, Jetta, Passat, and more. The company stopped making its once-popular Volkswagen Beetle compact car in 2019 due to falling demand for smaller cars. Volkswagen’s best-known luxury brands are Porsche and Audi. The company also manufactures parts and offers customer financing and fleet management services.

2. Toyota Motor Corp. (TM)

• Revenue (TTM): $310.27 billion
• Net Income (TTM): $33.84 billion
• Market Cap: $‪243.3 billion
• 1-Year Return (TTM): -23.7%
• Exchange: New York Stock Exchange (NYSE)

Toyota (TM) is a Japan-based multinational. It was the first foreign manufacturer to build a dominant market share in the U.S. automobile market by setting the industry standard for efficiency and quality. Toyota designs and manufactures cars, trucks, minivans, and commercial vehicles. Vehicle models include the Corolla, Camry, 4Runner, Tacoma, and the Prius, the hybrid electric sedan. Lexus is the company’s luxury car division. Toyota also produces parts and accessories and provides dealers and customers with financing.

3. Stellantis (STLA)

• Revenue (TTM): $156.88 billion
• Net Income (TTM): $5.52 billion
• Market Cap: $37.7 billion
• 1-Year Return (TTM): -48.0%
• Exchange: NYSE

Stellantis (STLA) is a multinational automaker that was created in 2021 through the merger of French automaker Groupe PSA and Italian-American automaker FCA (Fiat Chrysler Automobiles). The company is one of the largest automakers in the world, with a strong presence in Europe, North America, and South America. Stellantis offers a wide range of vehicles, including passenger cars, trucks, vans, and SUVs, under various brands including Peugeot, Citroën, DS, Opel, Vauxhall, Jeep, Ram, Dodge, and Chrysler. The company is headquartered in Amsterdam, Netherlands.

4. Mercedes-Benz AG (MBGYY)

• Revenue (TTM): $147.95 billion
• Net Income (TTM): $10.84 billion
• Market Cap: $60.5 billion
• 1-Year Return (TTM): -14.8%
• Exchange: OTC

Mercedes-Benz (MBGYY) is a German-based multinational automobile manufacturer. The company manufactures passenger cars, vans, off-road vehicles, and commercial vehicles like transport trucks and buses.

5. Ford Motor Co. (F)

• Revenue (TTM): $184.99 billion
• Net Income (TTM): $5.88 billion
• Market Cap: $37.8 billion
• 1-Year Return (TTM): -17.8%
• Exchange: NYSE

Ford (F) is a multinational automotive manufacturer based in Michigan. The company develops, manufactures, and services cars, SUVs, vans, and trucks. Vehicle models include the Mustang, Edge, Escape, F-150, Ranger, and more. The company also provides vehicle-related financing and leasing.

6. General Motors (GM)

• Revenue (TTM): $187.44 billion
• Net Income (TTM): $7.19 billion
• Market Cap: $48.8 billion
• 1-Year Return (TTM): +22.1%
• Exchange: NYSE

General Motors (GM) is a multinational automobile manufacturer. The company designs and manufactures cars, trucks, and automobile parts. It has been a leader in the development of electric cars, first with the Chevy Volt and its successor, the Chevy Bolt. It operates under four major vehicle brands: GMC, Chevrolet, Cadillac, and Buick. The company also offers automotive financing.

7. Honda Motor Co. Ltd. (HMC)

• Revenue (TTM): $144.43 billion
• Net Income (TTM): $6.90 billion
• Market Cap: $45.3 billion
• 1-Year Return (TTM): -21.1%
• Exchange: NYSE

Honda (HMC) is a Japan-based multinational automobile company. It manufactures passenger cars, trucks, vans, all-terrain vehicles, motorcycles, and related parts. Vehicle models include the Civic, Accord, Insight Hybrid, Passport, Odyssey, and more. Acura is the company’s luxury car division. The company also provides financial and insurance services.

8. Tesla Motors (TSLA)

• Revenue (TTM): $97.69 billion
• Net Income (TTM): $7.13 billion
• Market Cap: $942.3 billion
• 1-Year Return (TTM): +45.0%
• Exchange: Nasdaq

Tesla (TSLA) is a manufacturer of electric vehicles and clean energy solutions. Tesla manufactures five electric models: the Model 3, Model S, Model X, Model Y, and Cybertruck. Each model is capable of speeds of more than 135 miles per hour and can accelerate from 0 to 60 in less than 4.8 seconds. Most have a range of more than 310 miles. Tesla provides financing for retail customers.

9. Nissan Motors (NSANY)

• Revenue (TTM): $84.03 billion
• Net Income (TTM): $706.5 million
• Market Cap: $10.7 billion
• 1-Year Return (TTM): -25.7%
• Exchange: OTC

Nissan (NSANY) is a Japan-based multinational automotive company. It designs and manufactures passenger vehicles and related parts. Vehicle models include the Altima, Maxima, Sentra, Versa, Pathfinder, Rogue, Titan, and its LEAF electric car. The company’s luxury division is Infiniti. The company also offers financing and leasing services.

10. BYD Co. Ltd. (BYDDY, BYDDF)

• Revenue (TTM): $682.2 billion
• Net Income (TTM): $33.8 billion
• Market Cap: $146.5 billion
• 1-Year Return (TTM): +90.3%
• Exchange: OTC

BYD Co. Ltd. (BYDDY, BYDDF) is a Chinese multinational corporation that specializes in the design, development, and manufacture of a wide range of products, including electric vehicles, batteries, solar panels, and other renewable energy products. The company is headquartered in Shenzhen, China, and has operations in more than 70 countries around the world. BYD is known for its leadership in the electric vehicle industry and has a strong presence in both the passenger car and commercial vehicle markets. In addition to its core businesses, BYD also has a significant presence in the renewable energy sector and is a leading supplier of solar panels and energy storage systems.