Down and discouraged for the first four months of the year, the U.S. stock market has bounced back in May. The benchmark S&P 500 is up 12.5% over the past month and is back in the black year to date, returning 1% as of the May 20 close.
That latter figure isn’t gaudy, but when investors consider how far the stock market had fallen through March 31, when the S&P 500 was down 5% for the year, May’s figures look as if the market is on the right track. That’s really saying something, given the litany of bad news on tariffs and trade, inflation, corporate earnings, supply chain kinks, and jobs.
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That doesn’t mean the stock market is fully recovered, as all of the above threats have only moderated and not been eliminated. It means there are enough “sweet spot” opportunities for investors to capitalize on more favorable opportunities, if they know where to look.
“The stock market feels like it’s caught between a soft-landing narrative and lingering economic uncertainty,” says Harold Wenger Jr., partner and wealth manager at Kingsview Partners in Lancaster, Pennsylvania. “We’re seeing pockets of enthusiasm, especially in tech and AI, but they are layered over inflation concerns, interest rate debates and geopolitical tension.”
That means it’s not a market to gamble in right now. “Instead, it’s a market to think long term, stay invested according to your risk tolerance, and focus on companies with strong fundamentals and real cash flow,” Wenger adds.
Other market experts agree, noting the stock market operates in a contradictory space. “On one hand, macro data, particularly employment and consumer spending, has remained resilient,” says Brian Chasin, a longtime investor and chief financial officer at SOBA New Jersey. “On the other hand, core inflation remains persistent, and the impact of sustained high interest rates continues to pressure both real estate and lending-heavy sectors.”
From that vantage point, investors may have to squint hard for opportunities and understand there’s little appetite for speculative growth. “Capital is being deployed more conservatively, focused on recession-resilient sectors and assets with stable cash flow,” Chasin says. “I don’t foresee a meaningful rally until there’s clarity on rate cuts or a structural rebalancing of commercial credit markets. I’m favoring companies with balance sheet strength and pricing power.”
In such a vulnerable, emerging market environment, these are the stocks some of the savviest stock pickers like best, with their returns year to date compared with their particular industry’s average:
| Equity | YTD Performance* | Industry Average YTD Performance* |
Dividend Yield (TTM)* |
| Johnson & Johnson (ticker: JNJ) | 7.1% | 3.8% | 3.2% |
| Prologis Inc. (PLD) | 3.8% | 1.8% | 3.6% |
| Broadcom Inc. (AVGO) | 0.2% | -0.6% | 1.0% |
| Berkshire Hathaway Inc. (BRK.B) | 12.2% | 11.8% | 0.0% |
| British American Tobacco PLC (BTI) | 24.4%** | 33.2% | 6.7% |
| Amazon.com Inc. (AMZN) | -7.0%*** | 1.9% | 0.0% |
| Walmart Inc. (WMT) | 8.8%# | 9.4% | 0.0% |
| Palantir Technologies Inc. (PLTR) | 66.1% | 9.3% | 0.0% |
| Target Corp. (TGT) | -25.8% | 9.4% | 4.6% |
*As of May 20.**BTI has beaten its benchmark by 15.3 percentage points year to date.
***Five-year average annual return is 10.3%, compared with industry average of 7.5%.#One-year return is 53.8%, compared with an industry average of 35.6%.
Johnson & Johnson (JNJ)
Year-to-date return: 7.1% Industry average: 3.8%
Johnson & Johnson is Wenger’s top pick right now. “It’s a company that doesn’t get headlines, but gets results,” he says. “It’s also a safe harbor for long-term investors with a proven track record, diversifies income across pharma, medical devices, (and has) a strong balance sheet and a 60-year streak of dividend growth.” If you’re looking for a stock that offers stability, consistency and compounding returns without drama in a market where noise often outweighs signals, JNJ could be the prescription for you.
Prologis Inc. (PLD)
YTD return: 3.8% Industry average: 1.8%
One real estate investment trust, or REIT, with the balance sheet strength and pricing power that Chasin likes is Prologis. This San Francisco-based real estate logistics company “stands out” to Chasin, who views logistics infrastructure as a sector with long-term demand tailwinds tied to e-commerce and with stability across economic and market cycles. “PLD’s tenant base provides income stability, the company is positioned to benefit even in a muted economy, and their development pipeline allows for controlled, strategic growth,” he notes. “From a risk-adjusted standpoint, it’s one of the few REITs I’d consider in the current environment.”
PLD also offers a solid 3.6% dividend yield, providing added assurance in a tough market.
Broadcom Inc. (AVGO)
YTD return: 0.2% Industry average: -0.6%
Semiconductor powerhouse Broadcom is proving to be a stalwart in the AI server products market, which is currently experiencing robust demand. Broadcom has made a big bet on customer AI chips, and that bet is already paying off. The company sees a huge market for AI infrastructure chips with a long flight path, so even at a premium, AVGO should be a good bet for investors right now.
“Broadcom is an amalgamation of high-value chip and software businesses that on the whole are differentiated and moaty, in our view,” Morningstar’s William Kerwin recently wrote. “Broadcom is a terrific aggregator of firms, big and small. Its ability to acquire and streamline generates strong profits and cash flow, and fuels its robust dividend.”
AVGO pays a trailing dividend yield of 1%, a decent payout for a growing tech stock.
Berkshire Hathaway Inc. (BRK.B)
YTD return: 12.2% Industry average: 11.8%
In a decidedly cautious stock market, market gurus advise buying companies you want to own 10 years from now, not companies you would expect to take massive profits on in two months’ time. One stock that fits the bill here is Berkshire Hathaway.
“Even with the news of Warren Buffett stepping down, the company philosophy will continue his legacy of value-based investing in solid income-generating companies,” says Mike Milligan, a certified financial planner and CEO of Ideas by Mike, a New York-based financial planning company. “If there is value in an acquisition, they have the cash available to purchase what fits their portfolio.”
A case in point: Berkshire Hathaway accumulated $347.7 billion in cash and cash equivalents as of March 31, its highest volume ever. That’s a ton of financial firepower that gives Berkshire leverage even in down market cycles.
British American Tobacco PLC (BTI)
YTD return: 24.4% Industry average: 33.2%
BTI may be trailing some peers year to date, but it’s beating its benchmark index by about 15 percentage points. Fortified with a whopping 6.7% dividend yield and a $98 billion market cap, British American Tobacco is another stock that offers Main Street investors stability in a volatile stock market.
“Its solid dividend yield is likely to be raised, it’s on a below-market price-to-earnings ratio and it’s beating all major indices year to date,” says Vince Stanzione, CEO and founder of the Monaco-based financial publishing firm First Information and author of “The Millionaire Dropout.”
BTI will give its next market update on June 3, and Stanzione expects it to be positive. “The overall tobacco sales should remain solid, and the newer smoke-free products such as Vuse (vape) and Velo (nicotine pouches) should continue to do well, with Velo growing rapidly,” he says.
The company’s legacy brands include Dunhill, Kent, Lucky Strike, Pall Mall, Rothmans, Newport, Camel and Natural American Spirit. “These brands continue to generate massive free cash flows, which the company uses to pay dividends and buy back shares,” Stanzione adds.
Amazon.com Inc. (AMZN)
YTD return: -7% Industry average: 1.9%
Amazon.com has had a rough go so far this year, but overall it’s proven itself more than worthy of investor attention, with a five-year average annual return of 10.3%, compared with an industry average return of 7.5%. Market experts also note that investors are in a wait-and-see mode as they absorb the effects of global tariff changes and the slowdown in spending, and are watching the Federal Reserve for interest rate cues. “The bottom line is the easy money has been made as stocks have rebounded, and the market has recovered over 50% of its tariff news-based sell-off,” says Jason Brown, stock market analyst at TheBrownReport.com and author of “The Five-Year Millionaire.”
In this market environment, Brown favors Amazon for a variety of reasons. “The company is a play on e-commerce, technology, consumer staples and consumer discretionary,” he says. “Basically, Amazon covers a wide variety of the economy for investors to capitalize on. If you want to buy stuff you don’t need, go to Amazon. If you want to buy the stuff you do need, go to Amazon,” he adds. “If you want to sell your products or host your data in the cloud, go to Amazon.”
Additionally, Amazon has a subscription-based business in which customers pay for Prime services, and who evidently are fans of two-day shipping. “Consequently, Amazon has a revenue base baked in that’s based on renewals,” Brown says. “The company is also able to participate in the AI craze, with companies hosting their data and running their software on the AWS platform.”
Walmart Inc. (WMT)
YTD return: 8.8% Industry average: 9.4%
Another retailer with deep pockets and strong leadership, Walmart has the pricing power and distribution that leave other retailers envious.
“WMT has the ability to pass tariff costs on to their suppliers, and they have subscription-based Walmart Plus and Sam’s Club memberships that boost revenue, much like Amazon,” Brown says. “Walmart also allows ads and third-party sellers on their platform, almost competing with Amazon or eBay, albeit without the opportunity to bid.”
Walmart has also mastered the basics, moving tons of consumer staples products like groceries, deodorant, toothpaste, and commodities you don’t need like electronics and bikes, Brown says. “Walmart covers a wide variety of goods consumers want, and with their pricing power, they offer great prices that turn into profit based on sheer volume.”
Palantir Technologies Inc. (PLTR)
YTD return: 66.1%
Industry average: 9.3%
Palantir is one of the new kids on the block in delivering software platforms to both government and commercial companies and helping them deploy AI applications. “There’s a huge amount of growth in helping the government modernize its outdated software and in deploying custom software for commercial companies interested in expanding,” Brown says.
The stock is an outlier this year, pulling in 66% gains year to date, which may lead investors to think it’s too late to board the bandwagon. Yet, with its expanding government and corporate contracts and an estimated 39% year-to-year revenue growth in 2025, PLTR should continue its bull run well into 2026. At some point, however, investors in the specialty software company can expect a pullback.
Target Corp. (TGT)
YTD return: -25.8% Industry average: 9.4%
If retailers are prominent on this list, that’s not by accident. With inflation moderating, tariff angst subsiding and consumers’ views on the economy changing, big retail stocks should benefit.
That’s the case for Target, which, at first glance, doesn’t look so rosy. The stock is trading at 63% below its all-time highs and has experienced a high-profile boycott from customers who wanted TGT to stay out of culture wars. The company’s first-quarter financial results didn’t wow anyone, with adjusted earnings per share falling to $1.30 from $2.03 year over year, and net sales down 2.8%.
Yet the retail giant is showing signs of a potentially big rebound, with first-quarter digital sales up 4.7%, thanks primarily to new initiatives like same-day deliveries and drive-up services.
Factor in a fading tariff problem (for now) and a sizable 4.6% dividend yield, and investors can get into a rebounding retail giant at a deep discount. Telsey Advisory’s Joe Feldman held his “buy” call on the stock this week with a lower price target of $130. The stock is trading around $94 per share as of May 21.
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