Despite concerns over inflation, tariffs and slowing economic growth, the S&P 500 has made new all-time highs in 2025. Valuations in certain sectors have seemingly gotten stretched, but there are still reasons for investors to be optimistic about the stock market outlook.
Economists anticipate the Federal Reserve will soon resume interest rate cuts and will likely avoid a hard landing for the economy. Analysts anticipate roughly 10% earnings growth from S&P 500 companies in 2025, according to FactSet Research. President Donald Trump has extended the 2017 corporate tax cuts that were set to expire at the end of the year. In addition, high-growth tech trends such as automation, artificial intelligence and cloud computing will likely continue to help companies increase efficiency and unlock untapped earnings potential in 2025 and beyond.
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Bank of America maintains its US1 list of top investment ideas, which are U.S. stocks that analysts believe will help investors generate superior performance over the long term. The five best stocks to buy now include stocks from the US1 list that have the most potential upside based on Bank of America analyst price targets:
| Stock | Upside Potential as of Aug. 12 Close |
| RenaissanceRe Holdings Ltd. (ticker: RNR) | 76.1% |
| Blue Owl Capital Inc. (OWL) | 42.7% |
| Welltower Inc. (WELL) | 45.6% |
| Chewy Inc. (CHWY) | 35.3% |
| McCormick & Co. Inc. (MKC) | 38.9% |
RenaissanceRe Holdings Ltd. (RNR)
RenaissanceRe is a Bermuda-based global insurance and reinsurance firm. The company has a reputation for being the leading specialist in property-casualty reinsurance, providing insurance coverage to other insurance companies.
Reinsurance stock earnings are levered to weather and seismic activity, creating volatility risk, but it also makes them less correlated to financial markets as a whole.
Analyst Joshua Shanker says property-catastrophe policy pricing has peaked, but pricing remains at attractive levels and is likely sticky in the current high-rate environment. With the stock trading at an attractive price-to-tangible book value, Shanker says Renaissance has the best risk-return profile among the insurance stocks he covers.
Looking ahead, Shanker anticipates higher corporate expenses and lower investment yields will be fully offset by higher investment management fees and reserve releases.
Bank of America has a “buy” rating and $422 price target for RNR stock, which closed at $239.57 on Aug. 12.
Blue Owl Capital Inc. (OWL)
Blue Owl Capital is an alternative investment company that provides businesses with private capital solutions. The company’s products focus on private equity, credit and private equity real estate.
In July, Blue Owl announced a partnership with Voya aimed at developing private market investment products for Voya’s defined-contribution retirement plans. Analyst Craig Siegenthaler says Voya has $630 billion in defined-contribution assets and more than 9 million plan participants. Furthermore, employer-sponsored defined-contribution plans are currently valued at about $12 trillion. Siegenthaler says this market represents a huge catalyst for organic growth and fundraising for Blue Owl and other alternative investment companies. In fact, Blue Owl reported record fundraising in the most recent quarter.
“Virtually all of OWL’s management fees are insulated from redemptions, and we see limited downside risk to (earnings per share) across macroeconomic scenarios,” Siegenthaler said in a recent research note.
Bank of America has a “buy” rating and $29 price target for OWL stock, which closed at $20.32 on Aug. 12.
Welltower Inc. (WELL)
Welltower is a health care real estate investment trust that invests in health care facilities, including senior housing, specialty care facilities and medical office buildings. An aging baby boomer generation will likely ensure high demand for these types of senior housing and medical care facilities over the next decade.
Analyst Farrell Granath says Welltower has executed well in recent quarters, achieving the lowest expenses per occupied room (ExPOR) in the company’s history. Granath says Welltower has achieved these strong results by relying on its WBS platform, which is designed to optimize the company’s health care portfolio. She says the benefits of WBS have only recently begun to show up in the company’s overall financial numbers, and she is encouraged by the widening gap between ExPOR and revenue per occupied room.
Bank of America has a “buy” rating and $240 price target for WELL stock, which closed at $164.79 on Aug. 12.
Chewy Inc. (CHWY)
Chewy is one of the largest online retailers of pet products, prescriptions and supplies. The company offers roughly 130,000 different products and services on its e-commerce platform, which provides customers with around-the-clock convenience.
Analyst Curtis Nagle says the pet product market is historically stable and has produced consistent growth from a sticky customer base. Nagle says Chewy’s subscription-like autoship program has enhanced these attractive market features. The autoship feature provides customers a discount to automatically ship items they buy regularly.
Nagle anticipates accelerating growth trends in the pet products industry. In addition, he says Chewy has several levers to improve margins, including private brands sales and advertising campaigns.
“Based on our estimates for (Chewy Vet Care) locations to ramp and customer penetration to increase for Pharmacy, we see potential for $1bn+ in revenue that we believe the Street underappreciates,” Nagle said in a recent note.
Bank of America has a “buy” rating and $49 price target for CHWY stock, which closed at $36.21 on Aug. 12.
McCormick & Co. Inc. (MKC)
McCormick produces spices, seasoning mixes, condiments and other flavor enhancers for food retailers, manufacturers and foodservice businesses.
McCormick has a reputation for consistency, especially when it comes to paying its dividend. The company has paid investors a dividend for 101 consecutive years and has raised its dividend payout for each of the past 39 years.
Analyst Peter Galbo says McCormick will continue to report volume growth in the coming quarters, especially considering the company’s easy year-over-year comparisons. The company has maintained its full-year earnings guidance, reassuring investors who have been concerned about tariff impacts. Galbo says execution around the holiday seasons will be critical for McCormick in the second half of the year, but he says the stock is trading at a very attractive valuation given its improving margin trajectory and ongoing demand recovery in China.
Bank of America has a “buy” rating and $96 price target for MKC stock, which closed at $69.09 on Aug. 12.
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5 of the Best Stocks to Buy Now originally appeared on usnews.com
Update 08/13/25: This story was published at an earlier date and has been updated with new information.
