Best-performing stocks: February 2025

Data as of Jan. 31, 2025

Of course, not even the great stocks can do well all the time, so it can be useful to keep an eye on some of the stocks that have been underperforming. That’s because this year’s underperformers can become next year’s outperformers, and if you find a once-stellar stock among the dogs, it may be ripe for a bargain purchase.

Below are the worst-performing S&P 500 stocks in 2025.

Data as of Jan. 31, 2025

Here’s how the Magnificent 7 stocks have performed.

Data as of Jan. 31, 2025

While these hot stocks have performed well recently, that’s in the past now. As an investor you’ll need to determine whether the stocks are likely to go up in the future, if you want to buy them. That requires a lot of effort to understand the company, the industry, its competitive situation as well as analyzing the company’s statements such as its balance sheet. That’s a lot of work.

Sure, these stocks may continue to go up for a while (or not), but doing this research allows you to confidently judge whether to invest. Inevitably, even the best stocks go down sometimes, so you’ll need your knowledge to decide whether to stick with the company or sell.

If you invest only in the stocks that have performed well recently – without that background knowledge – you’re likely to wind up buying high and selling low. You’ll tend to chase whatever is hot at the moment, but then sell once it cools off.

You’ll want to look for a number of key features when evaluating which stocks to buy:

• Strong financials: Look at the company’s balance sheet – Is it on solid footing or does it have significant debt? Are the company’s margins improving? Are margins holding up well or are they declining over time?
• Solid competitive position: Is the company’s competitive position continuing to improve or is it eroding due to competition? 
• Growth: Has the company been able to grow sales and earnings in the recent past? Declining sales tend to limit the options available for a company. 
• Valuation: How expensive is the stock relative to its earnings and cash flow? You’ll need a sense of how much you’re paying for the company’s future growth.
• Management: Is management aligned with outside shareholders or are they enriching themselves at shareholders’ expense? How has management guided the business and are they telling shareholders the truth regarding the company?
• Future opportunities: Does the company have avenues to grow?

These things are key to a potential investment, but you’ll want to consider other factors such as the company’s capital allocation, including stock repurchases and dividends.

But what if you don’t want to do that amount of work yet enjoy the attractive return of stocks? Well, any investor can participate, even with very little knowledge. It’s easy for an investor of any skill level to purchase a fund based on the S&P 500 index. The fund owns stakes in all the companies in the index, meaning you own a tiny piece of hundreds of stocks.

That setup also means that your performance will tend to track the performance of the index over time, about 10 percent annually over long periods, even if you’re not researching and analyzing the various stocks within it. By buying this kind of index fund, you’ll get the weighted average of all the holdings, and you’ll outperform most investors, even the pros, over time.

Index funds come in two major variants: exchange-traded funds (ETFs) and mutual funds. Each has some benefits and drawbacks. But either way, you get the ability to track an index and to do so at what is often a relatively low cost, often a few dollars a year for every $10,000 invested.

However, if you’re looking to earn the returns of the index, it’s vital that you hold the index fund through the ups and downs, giving the investment the time to ride out the volatility. Otherwise, you’ll probably end up selling low and buying high, as the index gyrates.

Following the hottest stocks helps you find out what the market likes, but if you’re investing in these individual stocks, you’ll need to research the business and understand what the opportunity is. But a more lucrative way might be to scour through the underperforming stocks and find the businesses that will eventually go back into favor, allowing you to buy low and sell high.

Editorial Disclaimer: All investors are advised to conduct their own independent research into investment strategies before making an investment decision. In addition, investors are advised that past investment product performance is no guarantee of future price appreciation.