Solita Marcelli is the chief investment officer, Americas, at UBS Global Wealth Management. Read on as we ask Marcelli about her thoughts on how the global stock market and the U.S. economy will fare in 2025 and where investors should put their money.

What's your overall outlook for stocks in 2025? We see U.S. stocks as attractive for three main reasons.

First, a strong macro environment. Steady economic growth with Federal Reserve interest rate cuts is a supportive mix for stocks. Historically, the S&P 500 averages about an 18% return in the 12 months following the first rate cut when there has been no recession.

Second, robust earnings growth. We anticipate about 8% growth in earnings per share, on average, for S&P 500 companies next year, building on an expected 11% for 2024.

Third, spending on artificial intelligence (AI) will stay strong as we head into 2025. Considering all of this, our S&P 500 target for December 2025 is 6,600.

What's your forecast for the economy? When I think about this cycle, it's anything but ordinary. The Fed is cutting rates to ease monetary policy, but what's unique is that this is occurring at a time when gross domestic product (GDP) growth remains healthy. We expect growth to stay resilient into next year, with GDP growth of around 2% to 2.5% over the next 12 months. Some cooling might occur, but a major slowdown seems unlikely.

The economy is bolstered by a strong labor market, with no signs of widespread layoffs – at least at this point – and by rising disposable income, after inflation. This should lead to more consumer spending.

Also, Fed easing should help extend the cycle. Following the Fed's first half-point cut, we anticipate another 1.5 percentage points in cuts by the end of 2025 because of our view that inflation will remain relatively contained.

Where do you see inflation ending up? I think it'll be slightly above the Fed's target of 2%. We're heading there, maybe slowly.

Given that backdrop, where should investors put their money in 2025? U.S. stocks are attractive, especially large-cap companies. We're leaning into sectors benefitting from two main factors. One is a macroeconomic environment with low rates and resilient growth, which favors financials and stocks in the consumer discretionary sector.

The second factor is strong spending on artificial intelligence. Tech stocks are a favorite here, as well as communication services, home to some of the big AI beneficiaries. We also like utilities, which benefit from this AI data center boom. At a high level, these are the sectors that provide the biggest opportunities.

Utilities are up quite a bit already. Do you see more running room? We do. But we are not just basing our views on the AI boom. We also like a bit of defensive exposure in our portfolios because we're late in the business cycle. Utilities are our preferred defensive segment.

Do you see the market broadening out beyond the mega-cap tech names and the so-called Magnificent Seven? AI leaders will continue to perform well – I still think that AI is one of this century's biggest investment opportunities.

But beyond AI, other market leaders should emerge as well, such as the beneficiaries of government spending on infrastructure and reshoring. Some $2 trillion is earmarked for these initiatives in the coming years. We have seen a rise in announcements of new U.S. facilities, and manufacturing construction spending is at a multi-decade high as a percentage of GDP. Companies that are involved in infrastructure, energy efficiency, reshoring and cybersecurity (to protect critical infrastructure from cyberattacks) are well positioned to benefit. So, within large caps, we like tech overall, but we don't expect it to dominate to the extent it has in the past couple of years.

What about small-company stocks? We don't love them that much, to be honest. Small caps are inexpensive, and they benefit from lower rates, although many still face challenges from refinancing long-term debt at higher rates. But we see them as less appealing over the next six to 12 months. Earnings at small-cap companies could continue to lag unless we see an acceleration in GDP growth.

What's your view of international markets? The U.S. is our most preferred region. That said, we see op­portunities abroad as well.

In the eurozone, it's important to be selective, as earnings growth is just recovering. There, we particularly like small and midsize companies, where valuations are at 20-year lows compared with large caps.

In Asia, we see opportunities, especially in Taiwan and South Korea, where you can tap into secular trends like AI. India is also appealing, with strong structural growth drivers and favorable demographics. Japan has long-term potential, but we're less enthusiastic over the short term because we expect profit growth to slow there.

Overall, we're neutral on emerging markets. The environment is becoming more favorable, but we're holding back until there's more clarity on China's policy of fiscal support and political uncertainty clears in the U.S. – for example, with what's going to happen with tariffs.

Geopolitical strife has been a concern for investors, and gold has run up as a result. Will that be a major theme in 2025? The Middle East conflict is certainly a concern. But I think it would impact markets only if it disrupts oil supplies and pushes prices above $100 a barrel (up from the mid-70s recently), which could affect consumers. At this point, that's not our base case.

But we're very constructive on gold. It will continue to serve as a hedge in port­folios, not just for geopolitical risk, but for clients worried about the impacts of the U.S. election, Fed independence, fiscal spending, deficits, tariffs, etc. I like gold, and I think it has more room to run. Exchange-traded fund flows are picking up. We still expect strong demand from central banks, and lower interest rates tend to support gold prices. We have a target for September 2025 of $2,900 per troy ounce.

Lastly, do you have any advice for fixed-income investors? Over the next six to 12 months, we're focusing on higher-quality assets, such as investment-grade corporates with attractive yields hovering in the upper 4% range. We also favor agency mortgage-backed bonds. We like medium-duration bonds, around the five-year mark on the yield curve. This segment typically does well when the Fed cuts rates. So, medium duration, high-quality bonds.

Note: This item first appeared in Kiplinger's Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.

Related content

• Where to Invest in 2025
• Europe Faces Economic and Political Headwinds Next Year
• Rising Prices: Which Goods and Services Are Driving Inflation?

Trading was turbulent on Monday as investors digested the latest bank headlines and looked ahead to the next Fed meeting. 

In addition to news that UBS Group (UBS) will take over embattled competitor Credit Suisse (CS), reports emerged that JPMorgan Chase (JPM) CEO Jamie Dimon is leading efforts to save beaten-down regional lender First Republic Bank (FRC). Those developments helped lift most bank stocks – although two in particular took notable dives. 

After last week's turmoil at Credit Suisse, Swiss regulators over the weekend encouraged UBS Group to buy the bank for $3.2 billion, or not quite half of the latter's market value as of Friday's close. The deal sent shares of CS tumbling 53.0%, while UBS stock added 3.3%.

"After all the years of rumors suggesting that UBS and Credit Suisse could or would merge, it's finally happening, but as a hastily arranged brokered deal to help halt heavy outflows from CS, as well as designed to help bolster confidence in the global banking system," says Quincy Krosby, chief global strategist for LPL Financial. Given the speed with which the buyout occurred, there's likely to be a "host of questions" and a "broad range of concerns," including over "many of the risky and hard to price assets sitting on CS's balance sheets," the strategist adds.

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Back at home, First Republic Bank continued to struggle, slumping 47.1% even as JPMorgan CEO Jamie Dimon gathered with top bank CEOs to discuss rescue efforts to save the struggling regional lender. Last week, JPM and other big financial firms committed to depositing billions of dollars in First Republic to shore up its liquidity.

Meanwhile, investors kept a cautious eye trained on this week's Federal Reserve meeting, which kicks off tomorrow and will conclude on Wednesday with a policy decision. Interest rate traders assign a 73% probability to the Fed issuing a 0.25% interest rate hike. By the same token, the market is pricing in about a 27% probability that the central bank will pause its campaign of rate increases due to instability in the financial sector.

Ahead of the start of the two-day gathering, the Dow Jones Industrial Average rose 1.2% to 32,244, the S&P 500 gained 0.9% to 3,951, and the Nasdaq Composite added 0.4% to 11,675.

Gold is an "attractive opportunity" for investors

Following the recent turmoil in the bank industry, the word at the top of everyone's mind is "contagion," says George Smith, portfolio strategist; Jeffrey Buchbinder, chief equity strategist; and Lawrence Gillum, fixed income strategist at LPL Financial, with many folks wondering "if troubles at Silicon Valley Bank, CS, and others [will] spread to the wider banking sector and lead to a 2008-like banking crisis." Happily, the strategists say that several metrics of financial market stress "suggest the recent banking challenges are contained." 

Even so, the group reminds investors that when stocks are fluctuating wildly, it's critical to stick to a well thought-out plan that maintains focus on long-term objectives. One of the more attractive opportunities the LPL strategists pinpoint in this macro environment are precious metals – and particularly gold. Two of the easiest ways to gain access to the hard asset are through the best gold ETFs and the best gold stocks. 

Stocks spent most of Wednesday in panic-selling mode as the fallout of the Silicon Valley Bank/Signature Bank failures spread to Swiss bank Credit Suisse (CS) and throughout the broader European financial market. But while bank stocks suffered significant losses today, the major indexes closed well off their lows. 

Credit Suisse plunged 13.9% after Saudi National Bank – its biggest investor – said it will not increase its stake above 10% in the financial services firm, according to Bloomberg News. This only added to the bank's current woes, with CS earlier this week stating in its annual report that it had found "certain material weaknesses" in its fiscal 2021 and 2022 results. This pressured the broader European banking sector, with global financial giants like UBS (UBS, -6.4%) and Barclays (BCS, -8.2%) among those suffering notable losses.

"In the absence of facts, everyone is left with little choice but to speculate and frankly, what little commentary we've had hasn't really helped," says Craig Erlam, senior market analyst at currency data provider OANDA. "We're now left in a situation in which stock markets have tumbled, banks around the world have been pummeled and everyone is wondering just how bad the situation is going to get."

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Meanwhile, First Republic Bank (FRC) crumbled 21.4% after S&P Global Ratings downgraded the regional lender's credit rating to junk status, saying "the risk of deposit outflows is elevated." The ratings agency added that it believes "First Republic's business position is weaker following the events of the past week," and that "its business stability has weakened as market perceptions of its creditworthiness have declined."

Today's chaos in the financial sector took attention away from this morning's batch of economic data. On the inflation front, data from the Labor Department showed the producer price index (PPI) – a measure of what suppliers charge businesses for goods – fell 0.1% month-over-month in February, and was up 4.6% on an annual basis. This compares to January's 0.3% monthly and 5.7% yearly increases. Separately, the Commerce Department said retail sales declined 0.4% in February, compared to January's 3.2% spike.

"The decline in producer prices coupled with a pullback in retail sales is certainly good news for the Federal Reserve, particularly as it has to focus on maintaining financial stability amid bank meltdowns domestically and abroad," says Quincy Krosby, chief global strategist for LPL Financial. "This should solidify the probability of a 25 basis point rate hike next week, if the Fed is going to raise rates at all." Market expectations are nearly split on a pause or a 0.25% rate hike at the next Fed meeting.

While the major indexes finished well off their session lows, two of the three racked up losses on the day. The Dow Jones Industrial Average gave back 0.9% to 31,874, while the S&P 500 fell 0.7% to 3,891. The Nasdaq Composite managed to eke out a marginal gain to end at 11,434.

The best communication services stocks to buy

Utility stocks and consumer staples stocks were two of the day's biggest gainers as investors sought out traditional defensive plays.

Another outperformer was the communication services sector, which houses a wide variety of industries – including internet media, entertainment and telecom services. The sector has had a strong start to the year after slumping alongside the broader market in 2022. And despite lingering macro headwinds, there are "pockets of opportunity" to be found, says Matthew Drukker, portfolio manager at Fidelity. 

Investors seeking out the best communication services stocks will want to look for "companies that can cut costs and maintain solid balance sheets," as they will likely have the "best long-term prospects to come out of a downturn in a stronger position," Drukker adds.

At first glance, the measures to curb drug price increases in the Inflation Reduction Act seem like negatives for pharma and biotech stocks. If passed, as expected, Medicare would be allowed to negotiate the price it pays for a limited number of drugs. Beginning in 2026, up to 10 of Medicare’s highest-cost drugs would be included in negotiations, rising to the top 20 by 2029. In 2025, an annual $2,000 cap would be introduced on Medicare beneficiaries’ out-of-pocket prescription drug costs. But strategists at UBS Securities see some silver linings.

“We think the news is supportive,” says Mark Haefele, global wealth management chief investment officer at UBS. By reducing uncertainty and establishing a more predictable pricing outlook, the legislation could remove a long-standing overhang on the sector.

Other provisions in the bill will partially offset the negative financial impact. Expanded health-insurance subsidies that this legislation funds would enable more people to afford prescription drugs and potentially increase overall sales. And the proposal to cap out-of-pocket spending should make prescription drugs more affordable for Medicare’s high-use elderly population. Overall, according to UBS estimates, the impact equates to less than 3% of global biopharma industry earnings over a 10-year time frame.

Meanwhile, health care stocks are especially attractive now, according to UBS. Large-cap pharma companies typically offer steadily growing dividends. "We think investing in income stocks like these can help investors during an economic slowdown," says Haefele. UBS notes that during the early 2000s downturn, earnings per share for the MSCI World Index fell 50.7% peak-to-trough; dividends per share declined just 11.9%.

Because of the sector’s defensive characteristics and its ability to reduce volatility in your portfolio, UBS rates health care as “most preferred” in their global equity strategy. Other parts of the sector, such as medtech, also offer attractive long-term growth.

It's a well-worn cliche that investors are supposed to buy when there's blood in the streets. In an apparent effort to help clients follow that counsel, the strategists at UBS Research Management recently went looking for the top stocks to buy amid this year's market carnage.

In late May, as stocks were reeling through their longest stretch of consecutive weekly declines in decades, the strategy team at the UBS Global Research and Evidence Lab put out a call to the firm's North American industry analysts, asking for their highest-conviction ideas.

The strategists collected scores of names, and then focused on top stocks where UBS analysts have "a truly differentiated view vs. the consensus, and where we have interesting or proprietary data sources."

The process produced what UBS calls its "highest-conviction calls in a volatile market," which we lay out in a table below.

Note that the stocks, all of which are Buy-rated by UBS, are listed by Wall Street's consensus implied price upside, from lowest to highest. That is, we used industry analysts' average 12-month price targets rather than target prices provided solely by UBS.

The idea was to inject a little "wisdom of crowds" into the process.

Before we get to the table of UBS's top stocks to buy now, let's have a look at what their analysts have to say about some of the names that Wall Street as a whole likes the best, too:

• Alaska Air Group (ALK, $48.88): "We've maintained ALK as our top pick in U.S. airlines in 2022 given they navigated COVID-19 particularly well by avoiding shareholder dilution and shoring up their balance sheet/improving net debt," writes UBS analyst Myles Walton. "The cost side of the equation is a bit more opaque given general inflationary concerns, but ALK is better protected than most due to their hedge portfolio."
• Micron Technology (MU, $69.94): "We are structural bulls on memory and on MU in particular as DRAM demand remains levered to markets such as cloud computing, 5G and autos, all of which have a long runway of growth," writes UBS analyst Timothy Arcuri. "We believe that as fundamentals and cycles prove to be more durable, there is a significant re-rating potential."
• Generac Holdings (GNRC, $268.88): "GNRC provides a relatively uniquely diversified opportunity to which investors can gain exposure to the rapidly growing solar and storage market with underlying earnings stability from GNRC's core business of recession-resilient home standby power," writes UBS analyst Jon Windham. "Dominant market share and strong demand for home stand-by power have insulated already high residential product margins from inflationary cost pressures."

Here's a look at the rest of UBS's top stocks for a volatile market:

It's understandable, even forgivable, if our current environment of rapidly rising prices has left investors at a loss.

After all, with inflation running at levels not seen in four decades, few folks have firsthand experience managing their portfolios against this kind of backdrop of rising prices.

Probably the first thing an investor needs to know about investing for rising prices is that some stocks actually benefit from inflation. Companies that have pricing power can have distinct advantages at times like this.

Conversely, companies with weak pricing power are at the mercy of rising prices. Rising prices increase their costs, which saps their margins and, by extension, their profits. A company that can't pass its rising costs onto customers by raising prices tends to be a bad bet when inflation runs hot.

Ideally, investors want to own stocks in companies with strong pricing power, and avoid those with weak pricing power. Helpfully, UBS Global Research has developed a proprietary framework to assess pricing power at the stock level.

UBS's Tactic for Tackling Inflation

Pricing is a lever to fight inflation, UBS says. Unfortunately, it's not one that every firm or industry can use.

"With inflation pressures surging, pricing power relative to cost exposures will be a key theme and source of [absolute outperformance] for global equity markets," writes the UBS Equity Strategy team.

Indeed, UBS finds that historically, whenever the two-year U.S. breakeven inflation rate has topped 2.5%, "companies with strong pricing power have outperformed their weak counterparts by nearly 14% on average over the next 12 months."

If shares in companies with strong pricing power have delivered those sorts of returns in the past, well, investors would do well to adjust their portfolios accordingly.

Let's explore UBS's best and worst stocks to buy for rising prices. The best stocks have pricing power and are Buy- or Neutral-rated by UBS industry analysts, while the worst stocks have weak pricing power and receive Neutral or Sell ratings.

You can see the full list of stocks below, with a few highlights of companies with the strongest (and weakest) pricing power.

The Best Stocks for Rising Prices Include…

• Apple (AAPL, $170.40) gets a Buy rating from UBS analyst David Vogt, who cites its ability to maintain and raise prices. "End-market demand has been improving year-over-year leading to elevated 'wait times' despite increased product procurement/production," the analyst says.
• Hasbro (HAS, $83.80) enjoys "pricing power because demand has held up well, while supply has been constrained given port congestion and difficulty to get product into the U.S.," notes UBS analyst Arpine Kocharyan (Buy).
• Nvidia (NVDA, $222.03) "is increasingly monetizing its software solutions more directly which should translate to higher margins and a greater component of revenue from recurring sources," writes UBS analyst Timothy Arcuri (Buy). "It continues to use software to open new markets for its unique hardware solutions which should provide headroom in terms of pricing."

The Worst Stocks for Rising Prices Include…

• Campbell Soup (CPB, $45.81) gets a Sell rating from UBS analyst Cody Ross. "Since 2017, packaged food companies' pricing power diminished as barriers to entry eroded," Ross writes. COVID-19 boosted demand and gave the industry a pricing-power boost, but Ross expects that to "diminish and revert to historical levels over the long-term."
• International Paper (IP, $47.05) suffers from the fact that pricing power for containerboard and paper products is mixed. "Paper products are largely commoditized and traded globally," notes UBS analyst Cleve Rueckert (Sell). "Producers rely heavily on third party logistics and freight in their domestic markets where inflationary pressures have been difficult to pass on."
• Universal Health Services (UHS, $148.96) struggled to control costs in Q4, "something we expect to continue through at least Q1," says UBS analyst Andrew Mok (Sell)." While the nursing labor market should improve throughout the year, we're normalizing to a market that's structurally weaker than it was in 2019. Even then, labor had already been a multi-year headwind for UHS."

Fresh reason to believe that the Federal Reserve could put the pedal to the metal as it fights high inflation cooled U.S. equities Tuesday.

Ahead of tomorrow's Federal Open Market Committee minutes release, Fed Governor Lael Brainard – who typically espouses looser monetary policies – suggested the central bank needed swift and aggressive action to beat back rocketing consumer prices.

In addition to suggesting rate hikes could occur at greater than a quarter percentage point at a time, Brainard also stressed the Fed's need to quickly unload some of the nearly $9 trillion in Treasuries, mortgage-backed securities and other assets it previously bought up to stimulate the economy.

"I expect the balance sheet to shrink considerably more rapidly than in the previous recovery," she said.

"It is undeniable that the Fed must rein in inflation, even with the risk of upsetting the stock market," says Greg Marcus, managing director at UBS Private Wealth Management. "The Federal Reserve under Jerome Powell has proven to be results-oriented and flexible. While it is a tall task, we believe the Fed is up for the challenge of engineering a 'soft landing.'"

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Brainard's comments sent the 10-year Treasury yield to as high as 2.567%, snuffing rebounds in the very same technology (-2.1%) and communication services (-1.3%) sectors that anchored Monday's rally.

That in turn clipped the Nasdaq Composite (-2.3% to 14,204), Tuesday's worst-performing major index. The S&P 500 declined 1.3% to 4,525, while the Dow Jones Industrial Average was off 0.8% to 34,641.

Other news in the stock market today:

• The small-cap Russell 2000 slumped 2.4% to 2,046.
• U.S. crude futures retreated 1.3% to end at $101.96 per barrel.
• Gold futures slipped 0.3% to settle at $1,927.50 an ounce.
• Bitcoin edged 0.2% higher to $46,021.50. (Bitcoin trades 24 hours a day; prices reported here are as of 4 p.m.)
• Twitter (TWTR, +2.0%) has a new board member: Elon Musk. One day after Musk disclosed a large stake in Twitter, the social media company announced the CEO of Tesla (TSLA) will join its board of directors. "We applaud the decision by TWTR to add him to the Board and believe the move was inevitable given Musk's sizable position and likely desire to do so," says CFRA Research analyst Angelo Zino (Buy). "Overall, we believe Musk is a true visionary who can add valuable input/provide idea generation to help support new initiatives." Zino adds that by adding Musk to the board, it removes the option for an all-out acquisition of Twitter by Musk, considering, as a Class II director, he can only hold a maximum 14.9% equity stake during his term (which will expire in 2024).
• Carvana (CVNA) plunged 8.7% after RBC Capital Markets analyst Brad Erickson downgraded the stock to Sector Perform from Outperform (the equivalents of Hold and Buy, respectively). The analyst believes investors are "discounting in significant long-term growth" – especially amid a slower-growth environment – which allows less room for potential upside in the shares. This could possibly tilt the risk/reward profile in a less favorable direction "in the event of execution mishaps," he adds.

Let's Get Ready to Travel!

U.S. consumers are ready to get out of the house. That's the predominant mindset, anyway, based on the recently released results of a BofA Securities online travel survey conducted in March to measure online travel agency and behavior trends.

Among the most salient findings:

• Travel will be elevated compared to 2019 (as in, pre-pandemic) levels over the next 12 months.
• 62% of respondents said they expect to travel more than usual over the next 12 months.
• 41% of respondents said they plan to make up for previously canceled travel either this year or next.
• While "alternative accommodations" (think AirBnb or Vrbo) are gaining acceptance, all age groups still favor hotels.

While there's certainly risks to these expectations – higher prices could dampen enthusiasm, and another COVID outbreak is always a wild card now – consumers' hopes of hitting the road, seas and skies could put some real wind into the sails of various travel stocks, including these five hotel picks and these five restaurant plays.

For a wider smattering of potential travel winners, however, consider this list spanning cruise lines, auto rental businesses, air carriers and more:

Stocks traded lower on the two-year anniversary of the pandemic market bottom as familiar worries weighed on investor sentiment.

For starters, sizzling energy prices kept inflation concerns front and center. U.S. crude futures jumped 5.2% to $114.93 per barrel after Russia said a storm-damaged pipeline running from Kazakhstan to the Black Sea could cut exports by roughly 1 million barrels per day in the near term.

Rising interest rates also remained in focus as speeches from several Federal Reserve speakers indicated support for taking a more hawkish approach on inflation.

Among them was Cleveland Fed President Loretta Mester – a voting member of the central bank's rate-setting committee – who told reporters that she thinks "we're going to need to do some 50-basis-points moves." (A basis point is one-one hundredth of a percentage point.)

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Elsewhere on the economic front, data from the Census Bureau showed new home sales fell by a bigger-than-expected 2% in February to an annual rate of 772,000.

Additionally, mortgage applications are down around 8% this week, says Michael Reinking, senior market strategist for the New York Stock Exchange. "As we approach the ever-important spring selling season, this is a dynamic to pay close attention to," he adds.

At the close, the Dow Jones Industrial Average was down 1.3% at 34,358, the Nasdaq Composite was off 1.3% to 13,922 and the S&P 500 Index had given back 1.2% to 4,456.

Other news in the stock market today:

• The small-cap Russell 2000 plunged 1.7% to 2,052.
• Gold futures climbed 0.8% to $1,937.30 per ounce.
• Bitcoin slipped 0.3% to $42,234.00. (Bitcoin trades 24 hours a day; prices reported here are as of 4 p.m.)
• Adobe (ADBE, -9.3%) plunged at the open and remained grounded throughout the session following the company's Tuesday night earnings report, during which it lowered full-year sales forecasts to reflect the stoppage of operations in Russia. Its quarterly revenues of $4.26 billion and adjusted profits of $3.37 per share were both slightly better than expected. However, Adobe reduced its 2022 annual recurring revenue forecasts from Russia and Ukraine by a total of $87 million. "While Adobe is clearly going through a revenue deceleration and is the first large software firm to flag European weakness as a result of the conflict, the pending price increase will help to soften the blow," says UBS analyst Karl Keirstead, who remains on the sidelines with a Neutral rating (equivalent of Hold).
• Apple (AAPL, +0.8%) represented some rare green ink in a sea of red Wednesday. Multiple reports, citing people familiar with the matter, said Apple bought British financial technology startup Credit Kudos in a deal worth $150 million. The company is a competitor of "big three" credit reporting agencies Experian (EXPGY, -1.8%), Equifax (EFX, -1.2%) and TransUnion (TRU, -1.3%). "Credit Kudos' intelligent products enable businesses to leverage Open Banking to enhance affordability and risk assessments," according to Credit Kudos' website. "Our predictive insights are built by combining transaction and loan outcome data."

Stock Buybacks Could Have a Big Year

Don't let the market's daily noise distract you from its long-term signal. After all, investing is a marathon, not a sprint – and there are many reasons to be upbeat toward stocks, especially those that return cash to shareholders.

Companies that reliably grow their dividends, or gift investors with special one-time payments, are always worth paying attention to. And then there are those firms that have generous buyback programs, which can help boost earnings per share and stock prices to boot.

Indeed, the breadth of buybacks is currently running near a record high, according to the Goldman Sachs Portfolio Strategy Research team. As a result, GS recently raised its S&P 500 buyback forecast by 12% to $1 trillion for 2022.

"Looking ahead, our previously assumed headwinds to buybacks from higher effective corporate tax rates and a buyback excise tax no longer look likely," the team says. "Based on our forecast, buybacks will continue to represent the largest use of cash for S&P 500 companies, followed by capital expenditures."

Read on as we explore six companies that are repurchasing impressive amounts of their own stock.

Karee Venema was long AAPL as of this writing.

The busiest stretch of earnings season is behind us, but there are still plenty of notable names left to report. Included on this week's earnings calendar is Lowe's (LOW, $221.45), with the home improvement retailer set to unveil its fourth-quarter results ahead of the Feb. 23 open.

Like much of the broader market, LOW stock has struggled in early 2022. All told, shares are down 14.4% for the year-to-date to trade near levels not seen since late October.

Can LOW's fourth-quarter earnings help the stock reverse course?

UBS analyst Michael Lasser (Buy) thinks LOW presents a "compelling idea" for investors in 2022. The analyst also believes a key message the company has been able to put forth is that it "is able to drive market share gains in any macro backdrop and has several levers to expand operating margins independent of the sales backdrop."

Truist Securities analyst Scot Ciccarelli also has a Buy rating on LOW stock ahead of earnings. "With existing home inventory levels near historic lows, we expect continued home price appreciation, which should drive further home investment activity," Ciccarelli writes in a note.

He also expects to see gradual margin expansion for Lowe's, given steps management has taken to "shed underperforming assets, upgrade executive talent, invest heavily in technology and revamp multiple major operational processes."

As for LOW's fourth quarter results, analysts, on average, are targeting earnings per share (EPS) of $1.71 – up 28.6% on a year-over-year (YoY) basis – and revenue of $20.9 billion, a 2.8% increase over the year prior.

Plenty of Reasons to Roll the Dice on Caesars, Pros Say

After hitting a new 52-week low near $72 in late January, Caesars Entertainment (CZR, $80.04) shares have rebounded. CZR is up more than 11% since then – and Wall Street pros think there's additional upside in store for one of the top-rated S&P 500 stocks.

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B. Riley analyst David Bain (Buy) has a $191 price target on Caesars Entertainment, implying expected upside of nearly 141% from current levels.

"We calculate a base-case valuation of $191 per share, which combines $143 per share for CZR's Las Vegas and regional brick-and-mortar casino businesses; $41 per share for the digital casino business, which we believe will grow market share significantly faster than peers; and $7 per share for its managed casino business," Bain says.

Jefferies analyst David Katz sees plenty of positive catalysts for CZR too, including "the strength of the Las Vegas Strip, the acceleration in digital gaming and the sale of a Strip asset in the near term."

However, the omicron variant of COVID-19 may have negatively impacted business late in the fourth quarter and early in the first quarter. As such, Katz recently lowered his Q4 revenue outlook for Caesers to $2.6 billion from $2.7 billion. The analyst is also expecting the casino operator to post a quarterly loss of 16 cents per share.

Caesars Entertainment will report its fourth-quarter results after Tuesday's close. The pros, on average, are targeting a 73% year-over-year surge in revenue to $2.6 billion and a per-share loss of 92 cents, much narrower than the $2.67 per-share loss CZR incurred in the year-ago period.

Analysts Keep the Faith on Battered Block

Block (SQ, $98.30) – which changed its name from Square in December – had a rough end to 2021, with the stock shedding nearly 33% in the fourth quarter. Losses have only accelerated in 2022, with shares off more than 39% for the year-to-date, trading below the $100 mark for the first time since June 2020.

Still, Credit Suisse analyst Timothy Chiodo is keeping the faith. "We continue to believe that Block emerges as a larger, faster growth, and more diversified payments and financial services company," he says, particularly in the wake of the Block's acquisition of buy now, pay later firm Afterpay (the deal closed in early February). Chiodo has an Outperform rating on SQ, which is the equivalent of a Buy.

Deutsche Bank analyst Bryan Keane is another Wall Street pro who has a Buy rating on Block. "Given the market sell-off of fintech growth and worries about SQ fundamentals, we believe investor sentiment has turned surprisingly negative on Block’s outlook," the analyst writes in a note.

But in the wake of the Afterpay dea closing and "once SQ can provide some color on Cash App in fiscal 2022, we believe sentiment will quickly turn more positive," he adds. As for SQ's fourth-quarter results, due out after Thursday's close, Keane is anticipating earnings of 17 cents per share.

This is fairly conservative when compared to analysts' consensus estimate of 23 cents per share (-28.1% YoY). The pros, on average, also anticipate revenue of $4.0 billion in SQ's fourth quarter, up 28% from the year prior.

Growth investing came to a crashing halt in the early going of 2022, but investors shouldn't give up on beaten down stocks with high upside just yet, says the team at UBS Research Management.

Working in coordination with the firm's strategists and analysts, the UBS team came up with a list of 15 growth stocks they say look more attractive than ever amid the market's weak start to the year.

The researchers screened the market for Buy-rated stocks forecast to increase operating earnings at compound annual growth rates of at least 10% through 2024. At the same time, they looked for cheap stocks, or shares trading at discounts to their own five-year averages. Lastly, they stuck to names with high upside, based on analysts' price targets.

Adherents of growth investing looking for bargain names promising lots of upside should take note of the stocks UBS found. Among the highlights:

• Envestnet (ENV, $73.83) kicked off the new year with a thud. Nevertheless, UBS – and much of the rest of the Street – says ENV remains an outstanding idea for a growth investing portfolio. Envestnet's flagship product is an advisory platform that integrates services and software used by financial advisors in the wealth management segment. Bullish analysts like Envestnet's ability to both scale and squeeze more sales out of its user base.
• Power- and hand-toolmaker Stanley Black & Decker (SWK, $176.14) has something adherents of growth investing don't often find in a stock: A deeply compelling valuation. SWK stock trades at just 14.6 times analysts' 2022 earnings per share (EPS) estimate, per S&P Global Market Intelligence. UBS analyst Markus Mittermaier notes that puts SWK's valuation at a near-record low vs. the S&P 500 – and that, in turn, spells outperformance ahead.
• In addition to being one of UBS's top growth investing ideas for high upside, Terex (TEX, $43.09) also makes the list of best industrial stocks to buy for 2022. Best known for its aerial work platforms (AWP) segment and materials processing (MP) segment, Terex also makes equipment such as concrete mixer trucks. As such, the bull case stands on the $1.2 billion Infrastructure Investment and Jobs Act, as well as already robust backlogs in the company's AWP and MP businesses.

Share prices as of Feb. 1. UBS's implied upside is based on stock prices and price targets as of Jan. 21.

Have a look at the table below to see all 15 of UBS Research Management's growth investing stock picks to buy now:

Consumers have felt the sting of higher prices for months. Since May, annual inflation has been running at 5%, with October's consumer price index rising 6.2% from the year prior – the biggest such jump since 1990.

That's one reason why analysts, when picking their best stocks to buy now, are focusing on pricing power.

When companies face cost pressures – through higher prices for shipping and raw materials, for example – they have to choose whether to raise prices on their goods or services, or absorb the hit and let margins suffer. The best-positioned firms are those that can pass most of those prices along without consumers balking and taking their business elsewhere.

In a recent report, UBS identified several high-conviction picks that it views as "strong pricing power stocks" – those able to raise prices on products and that have solid margin momentum. The investment bank found that shares of companies with strong pricing power outperformed those without by around 20%, on average, over the following 12 months once inflation rises above 3% on an annualized basis, which is currently the case.

With that in mind, here are seven of the best stocks to buy now for a pricing power advantage, according to UBS. In addition to enjoying a high-conviction Buy rating from UBS, each pick ranks in the top third of its sector for pricing power, margin momentum and input cost exposure.

Data is as of Nov. 17. Dividend yields are calculated by annualizing the most recent payout and dividing by the share price.

• Sector: Technology
• Market value: $300.6 billion
• Dividend yield: N/A
• UBS' 12-month price target: $330 (7.5% implied upside)

Salesforce.com (CRM, $307.09) changed the way salespeople find and track leads by providing access to the service over the internet from a web browser, which was revolutionary in its day. The company also introduced the Software-as-a-Service (Saas) concept – or a pay-as-you-use model – helping clients avoid upfront installation costs and software upgrade maintenance.

The company remains the "clear leader" in salesforce automation and its software is considered "mission-critical" to sales teams in helping them generate revenue, according to Morningstar. Salesforce went from no product to 33% market share in 20 years.

UBS analyst Karl Keirstead says this about the company: "Salesforce is the market share leader within its two core markets (Sales and Service), which competes against legacy offerings from Oracle (ORCL) and SAP (SAP)."

Keirstead notes that demand for applications such as CRM "remains strong," raising his confidence about the company's ability to keep posting robust financial results. Healthy topline growth gives credence to the company's outlook of 20% for its operating margin in fiscal 2023, which was higher than what Wall Street expected.

This improved margin forecast is "sustainable" driven by three things: revenue outperformance, permanent shift to work from home, Zoom customer interactions and renewed internal cost controls, Keirstead says.

Wall Street analysts seem to agree that this is one of the best stocks to buy now. The consensus rating for CRM is a Buy with an average price target of $325.73, according to S&P Global Market Intelligence.

• Sector: Consumer cyclical
• Market value: $272.0 billion
• Dividend yield: 0.6%
• UBS' 12-month price target: $185 (7.7% implied upside)

If there's a company whose pricing power could be expected to remain strong under any economic environment, it is Nike (NKE, $171.83). For the seventh year in a row, Nike was named the world's most valuable apparel brand by global brand valuation consultancy firm Brand Finance in its 2021 report.

As the world's largest athletic apparel, shoes and equipment company, Nike has a history of signing endorsement deals with key athletes including Michael Jordan, LeBron James, Cristiano Ronaldo, Kevin Durant and Tiger Woods. This partnership with the best athletes gives sales a lift: A whopping 77% of NBA basketball players in the 2020-21 season wore Nikes or its Converse or Jordan shoes, according to shoe database Baller Shoes DB.

The company's revenue track record speaks to this brand dominance: Since 2010, sales have risen year-over-year with the exception of last year's pandemic. The longer-term trend is expected to resume this year, with analysts projecting a 5.8% rise in annual revenue to $47.1 billion.

NKE is also known for its innovation, from introducing pressurized air in the soles of running shoes more than 40 years ago to today's Nike Air Zoom Viperfly designed specifically for the 100-meter dash, and many others.

UBS analyst Jay Sole believes Nike's sales momentum can continue. He cites three sales growth drivers: industry trends, market share gains and channel mix shift. In recent years, NKE has been focusing more on its direct-to-consumer distribution channel as a growth engine.

Despite Nike's longevity and iconic brand status, Sole says the market "doesn't fully appreciate how the company's investments in product innovation, supply chain and e-commerce are working in concert to drive unit growth and ASP [average selling price] increases."

He sees NKE as a "long-term outperformer" that is expected to generate 18% earnings per share growth annually in each of the next four years.

The pros on Wall Street tend to agree. They have a consensus Buy rating on the stock with a $180.37 average price target.

• Sector: Real estate
• Market value: $37.8 billion
• Dividend yield: 0.7%
• UBS' 12-month price target: $380 (9.4% implied upside)

Thank SBA Communications (SBAC, $347.38) for the ability to access the internet, text or make calls on mobile phones and other wireless devices. The company owns and operates wireless infrastructure – cell towers, antenna placements on buildings and rooftops, distributed antenna systems and small cells (low-powered radio access nodes). Organized as a real estate investment trust (REIT), SBA has operations in the U.S., Canada, Latin America and South Africa.

Mobile data usage has been exploding and it is set to expand even more as 5G becomes ubiquitous. UBS analyst Batya Levi points out another catalyst: For the first time in years, all U.S. mobile carriers will be active in network deployments in the next 12 months. These include T-Mobile's (TMUS) 2.5 GHz rollout, Dish Network's (DISH) network buildout, 5G efforts and more.

Another reason SBAC is on this list of the best stocks to buy now is that network deployment internationally is about five years behind the U.S., meaning more business will be in the pipeline for the company. Internationally located towers make up about 20% of SBA's business, the analyst notes.

"Tower growth is strong, defensible and we believe SBAC is well positioned to capitalize on industry trends of rising data usage and increase carrier activity alongside the multi-year 5G investment cycle," Levi writes.

The analyst expects U.S. wireless capital expenditures to increase by around 10% to a record $35 billion this year and ramp up another 10% next year to nearly $40 billion. In contrast, spending has topped $30 billion a year in the past decade, Levi says.

As for analysts' consensus view toward SBAC: the average rating is Buy and price target is $370.11.

• Sector: Industrials
• Market value: $27.7 billion
• Dividend yield: N/A
• UBS' 12-month price target: $500 (14% implied upside)

Generac Holdings (GNRC, $438.68), a name synonymous with home backup generators, has been positioning itself for a clean energy future. Since 2019, the company has been expanding its home solar and energy storage businesses while maintaining market dominance in its core fossil-fuel generator business.

UBS analyst Jon Windham believes Generac can make inroads into the residential solar market due to its customer acquisition platform that will let it take market share from incumbents such as SolarEdge (SEDG) and Enphase (ENPH).

Also, its recent acquisition of microinverter firm Chilicon Power will transform GNRC into a "one-stop shop for residential clean energy solutions, unique within the solar supply chain, and providing Generac's installer network with a compelling value proposition," he says.

Generac also can use its market prowess – it has a 75% market share in North American home backup generators – to expand in the solar and energy storage market. The company's competitive advantages include its brand, experience converting marketing leads to sales, its existing customer service infrastructure, installer support and others, according to UBS.

"GNRC provides a relatively uniquely diversified opportunity to which investors can gain exposure to the rapidly growing solar and storage market with underlying earnings stability from Generac's core business of recession-resilient home standby power," the analyst says.

Another reason this is one of the best stocks to buy now: GNRC is cheap relative to its solar inverter peers. Specifically, shares are trading around 39 times 2021 estimated price-to-earnings (P/E) compared to 70 times for the latter.

Most of Wall Street is in agreement with UBS. The consensus analyst rating is a Buy, with an average price target of $505.53.

• Sector: Technology
• Market value: $2.5 trillion
• Dividend yield: 0.6%
• UBS' 12-month price target: $175 (15.9% implied upside)

When it comes to pricing power, it will come as no surprise to most consumers that Apple (AAPL, $151.00) – which revolutionized the smartphone market in 2007 with the iPhone – has loads of it. If Nike is the world's most valuable apparel brand, AAPL is the world's most valuable brand overall, according to Brand Finance.

Apple's slew of products and services are familiar to most people: iPhone, iPad, Apple Watch, Apple TV, Apple TV+, Apple Music, CarPlay and more. But with the iPhone – the biggest source of the company's revenue by product – at 14 years old and looking long in the tooth, investors are looking to AAPL's future bets to drive higher growth.

One of those bets is in the battery electric vehicle (BEV) market. Over the years, AAPL has invested in self-driving car licenses and remote-sensing LiDAR patents, according to UBS. Analyst David Vogt says he sees the company introducing a branded battery electric vehicle at some point and potentially snagging at least a 5% share in the global BEV market.

Apple's self-driving vehicle ambitions have been talked about for years. In January, Korean media reported that Apple was in talks with Hyundai to develop a self-driving electric car – though the automaker has since said the two were not involved in any such projects.

This comes after a December 2020 Reuters report that suggested Apple is not only aiming to produce a car, but also to introduce a new battery design that will drastically reduce battery costs and increase range, according to a person with knowledge on the matter. Now in June, Reuters reported, per those familiar with the effort, that Apple was in early stage talks with Chinese battery manufacturers to develop this battery.

"We believe Apple's significant cash flow should enable it to enter the battery electric vehicle market," Vogt says. "Although Apple is not a first-mover, its significant resources should enable the company to be a 'fast follower' in time" for the coming explosion in demand for electric vehicles. He sees the global auto market to become nearly 100% electric over the next 10 years.

The bulk of analysts are bullish on AAPL, too. The consensus rating among those tracked by S&P Global Market Intelligence is Buy and the average price target is $167.11.

• Sector: Healthcare
• Market value: $218.4 billion
• Dividend yield: 0.3%
• UBS' 12-month price target: $365 (19.4% implied upside)

Danaher (DHR, $305.59), a medical, industrial and commercial instruments company, adheres to the Japanese "kaizen" philosophy of continuous improvement, which became the basis for its Danaher Business System (DBS) way of operating.

This way of doing business is an "important" factor to consider when finding the best stocks to buy, according to UBS analyst John Sourbeer. DBS is a "lean operating model" encompassing all facets of planning, hiring, decision-making and benchmarking across the whole company. "DBS is Danaher," he says. "As such, it's critical for current or prospective shareholders to understand what DBS entails, what benefits it affords Danaher, and how to assess its future impact."

DBS posits that "exceptional people develop outstanding plans and execute them using world-class tools to construct sustainable processes, resulting in superior performance." Superior performance and high expectations then attract exceptional people, which propagates the cycle. Four priorities guide these efforts: Quality, Delivery, Cost and Innovation.

Historically, the company has grown through acquisitions. There is room for future merger and acquisition (M&A) activity to drive returns and share price appreciation, Sourbeer says. He is projecting a compound annual growth rate of around 7% for DHR's revenue over the next three years, which is higher than Street consensus of 6%.

Still, Sourbeer thinks he might be conservative in his forecast "given (Danaher's) increasing exposure to high-growth areas (pharma, bioproduction, diagnostics) and M&A upside. Further, DBS is driving operational excellence."

The consensus rating on Wall Street is Overweight (Buy), while the average stock price target is $339.17, according to S&P Global Market Intelligence.

• Sector: Energy
• Market value: $53.8 billion
• Dividend yield: 3.2%
• UBS' 12-month price target: $119 (29.5% implied upside)

The fracking revolution made America a net oil exporter instead of importer, a milestone that occurred in 2018 for oil and refined fuels for the first time in decades. EOG Resources (EOG, $91.90) is one of the largest independent oil producers in this market, with nearly all its production coming from U.S. shale fields. A former division of now-bankrupt oil giant Enron, EOG split off in 1999 and has not looked back.

The company differentiates itself by identifying prospective areas for exploration before competitors, enabling it to get attractive leasehold rates, according to Morningstar. EOG also has more experience in shale wells than most peers, resulting in above-industry average productions in new wells. Today's higher energy prices also boost revenue.

UBS analyst Lloyd Byrne believes EOG will be able to keep increasing shareholder returns. He points out that the company raised its base dividend by 10% this year to $960 million and paid a special dividend of $600 million as well. For 2022 to 2023, EOG is expected to generate $9 billion of cumulative free cash flow after base dividends, he says.

"With significant amount of free cash flow, we believe EOG will continue returning capital back to shareholders in the form of increasing base dividends, special dividends and share buybacks," the analyst writes.

As for handling inflationary pressures, EOG is "well positioned" to mitigate higher prices expected in 2022, Byrne says. He notes that the company expects to see flat to lower costs for drilling, including rigs, and completion services – accounting for around half of well costs. It can do this by reducing the number of drilling days, negotiating contracts at lower rates, and others.

The general view on Wall Street is that EOG is one of the best stocks to buy now. The consensus rating as a Buy and the average price target arrives at $108.30.

When it comes to financial security, it's comforting to know that you have adequate cash reserves to tap when you need them. But there's also a downside to stockpiling cash: It can drag down your portfolio's returns and cause you to fall behind financially over the long haul.

If you're like many Americans, you're probably sitting on a larger pile of cash than normal after spending less during the pandemic and depositing government stimulus checks.

Or maybe you trimmed your stock exposure during last year's bear market and never got back in. The U.S. personal savings rate (the percent of disposable income people save) was 27.6% in March. That's below the record 33.7% savings rate in April 2020, but it is nearly four times the pre-pandemic rate of 7.3%, according to financial services firm UBS.

Nearly $17 trillion was held in money market funds, bank savings accounts and small CDs (certificates of deposit) in January, up 24% from the start of 2020, according to Crane Data.

Economic research firm Moody's Analytics estimates that U.S. households had $2.3 trillion in "excess savings" at the end of the first quarter. This excess savings is on top of what households would have saved if the pandemic had not occurred and their saving behavior had been the same as in 2019.

Some investors have been reluctant to funnel their spare cash into assets such as stocks that have historically delivered bigger returns over time. U.S. investors had an "elevated" 19% of their portfolios in cash in April despite an improving economy and rising stock prices, a UBS survey found.

Sure, having a rainy-day fund can help you survive financial jams such as an unexpected car repair or job loss. But cash really shouldn't play a big role in investment accounts meant to fund long-term goals such as retirement or college tuition. "Cash becomes a drag on returns really quick," says Kristin McKenna, managing director at Darrow Wealth Management.

The Weight of Too Many Greenbacks

Having too much wealth parked in low-return assets can result in "portfolio drag," a term used to describe earning less on your money by playing it safer than you otherwise could.

"Too much cash is bad for your wealth," says Mark Haefele, chief investment officer at UBS. A $10,000 investment in a three-month Treasury bill, a proxy for cash, grew to $21,351 over a 30-year period ending in December 2020, a study by fund company T. Rowe Price found. In contrast, $10,000 invested in the S&P 500 stock index would have swelled to $211,000.

Running to the perceived safety of cash or trying to time the market can hurt you in the short run, too.

Consider investors who took some chips off the table last spring, when the S&P 500 suffered its fastest-ever 20% bear-market drop and then mounted a rapid rebound.

A portfolio that increased its cash holdings from 3% to 15% (thereby reducing its stock allocation from 60% to 48%) underperformed a portfolio that remained at 3% cash by roughly 7% in the recovery period from March 23, 2020, through August 18, 2020, according to Wells Fargo Investment Institute. And a portfolio that sold half of its 60% stock stake and put the proceeds into cash underperformed the 3% cash portfolio by 15%.

Another reason being too conservative can be costly: Cash, which yields zero, is losing purchasing power and generating a negative return when you factor in consumer inflation, which has risen over 4% in the 12 months through April.

Consider the following UBS analysis: Someone with a $5 million all-cash nest egg who has annual expenses of $250,000 that increase 2% per year due to inflation would have only $2.5 million left after 10 years after drawing down the cash to pay bills. The same portfolio invested in stocks could be expected to rise in value to $7 million over the same period.

The Bucket Approach

Weigh short-term needs against long-term goals to find an optimal cash position. Personal finance pros recommend a "bucket" approach that allocates cash over different time frames.

A zero-cash allocation isn't crazy. Once you have buckets one and two funded and can survive financial Armageddon, you likely have enough protection to invest aggressively with bucket three.

Younger investors have decades to recover from stock downturns. And those nearing or in retirement must keep their nest egg growing to fund golden years that could last decades, so building a growth-and-income portfolio of stocks and bonds makes sense. Vanguard's target-date fund for people who retired in 2015, for example, consists of 33% stocks, 66% bonds and 1% cash; a fund targeting retirement in 2025 holds 58% stocks, 41% bonds and 1% cash. "Try to stay fully invested," says Ward.

Bucket 1: Emergency fund. You need cash savings for emergencies such as an unexpected healthcare bill. View your emergency bucket "as your personal safety net when life throws you a curveball," says Judith Ward, senior financial planner at T. Rowe Price. Single-income households should have six to 12 months of regular expenses set aside. For dual-income families, three to six months should suffice.

It makes sense for retirees to build a cash cushion of one to two years of living expenses so that they can tap their emergency fund to ride out a market decline without having to sell retirement savings at depressed prices (see Get Ready to Retire With This Checklist).

"It's about protecting your long-term assets," says Ward, adding that research shows that most balanced portfolios (60% stocks, 40% bonds) recovered fully from the bear markets of 2000 and 2008 within one to two years.

Bucket 2:Major expenses or intermediate-term goals. If a big-ticket purchase such as a new car, college tuition or the down payment on a new home is on the horizon, you should have the money socked away for those things, too. You can't afford to risk money you'll need in a few years in the stock market.

High-yield savings or money market accounts, or even conservative short- or intermediate-term bond funds, are good choices for this goals-based bucket.

Bucket 3: Investments. For money earmarked for the long term, the less cash the better. "We don’' see cash as having a place in an investment portfolio," says McKenna, who recommends no more than 2%. Even a 5% to 10% cash weighting can act as a headwind.

To maximize long-term returns, emulate the low cash holdings favored by fund managers. The seven nations with the biggest government pension funds (a group that includes the U.S.) had average cash positions of 4% in 2019, UBS data show. Target-date retirement funds offered by Vanguard, which get more conservative as you near retirement, hold only about 1% cash in portfolios that target retirement in as little as five years.

Value stocks are finally having their day, and that has meant great things for a host of long-maligned value exchange-traded funds (ETFs).

Up until last year, growth had spent more than a decade running up the score against value stocks. However, once 2020 got into its late innings, Wall Street became optimistic about COVID-19 vaccine progress and stimulus measures re-energizing the economy. That began a sizable investor rotation out of growth and into value – one that has powered flows into a number of the market's best value ETFs, and that many investors expect to continue as Americans become increasingly immunized.

ETFs have broadly continued to gain in popularity, with global assets recently surpassing the $6 trillion mark for the first time, according to research and consultancy firm ETFGI. Helping fuel much of those gains here at home have been U.S. value ETFs, which at one point enjoyed an 11-week streak of inflows.

And numerous analysts continue to be bullish on value.

"We believe the next leg of the equity rally will be driven by value stocks, and small and mid-cap segments of the market," says Andrea Bevis, senior vice president, UBS Private Wealth Management. "Despite recent tech strength, investors should diversify beyond mega-cap tech companies and rotate into cyclical and value-oriented areas of the market that should continue to benefit from higher yields and a broadening economic recovery."

While some investors might prefer to pick out individual value stocks, others looking to reduce their risk might want to consider value ETFs instead. Exchange-traded funds allow investors to tap into dozens, even hundreds of value-priced equities, typically at just a few dollars in management fees annually.

Read on as we examine 10 of the best value ETFs you can buy. This list should include value flavors for just about any appetite, whether you're looking for large caps, smaller firms, international companies or even a personal values-based approach.

Data is as of May 13. Yields represent the trailing 12-month yield, which is a standard measure for equity funds.

• Assets under management: $80.1 billion
• Dividend yield: 2.2%
• Expenses: 0.04%, or $4 annually on $10,000 invested

We'll start out with one of the largest and lowest-cost options in the space, which typically means a look at a Vanguard ETF.

In this case, the Vanguard Value ETF (VTV, $138.62) is the largest among value ETFs by about $25 billion in assets, and it's tied with a few category funds as the cheapest, at just 4 basis points (a basis point is one one-hundredth of a percent).

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You get a diversified portfolio of more than 330 U.S. stocks that are selected based on a variety of value metrics, including price-to-book (P/B), historic price-to-earnings (P/E), forward price-to-earnings (forward P/E), price-to-dividend (P/D) and price-to-sales (P/S).

VTV has a large-cap tilt. Sixty-two percent of the fund's assets invest in large companies such as top holdings Berkshire Hathaway (BRK.B), JPMorgan Chase (JPM) and Johnson & Johnson (JNJ). Another quarter of the fund is dedicated to mid-cap stocks, with the remaining 8% in small caps.

Financials are the greatest sector weight in VTV at 23% of assets, followed by healthcare – which often straddles the line between value and growth – at 18%, industrials (14%) and consumer staples (10%).

VTV is inexpensive and straightforward, making it a high-quality core holding for investors seeking value exposure.

Learn more about VTV at the Vanguard provider site.

• Assets under management: $382.1 million
• Dividend yield: 1.3%
• Expenses: 0.29%

The Fidelity Value Factor ETF (FVAL, $47.21) is another bundle of value stocks with a different makeup and a different way of getting there.

FVAL is based on the Fidelity U.S. Value Factor Index, which uses four metrics equally to determine attractively valued companies: free cash flow (FCF) yield, enterprise value (EV)-to-earnings before interest, taxes, depreciation and amortization (EBITDA), price-to-tangible book value, and forward P/E. In the case of banks, it uses a 50-50 blend of price/tangible book and forward P/E.

The portfolio itself is a little more spread out across company size – 74% of assets are invested in large caps, versus 19% in mid-caps and a mere 3% in smalls.

But perhaps more striking is the heaviest weight in the portfolio: information technology (27%), which is traditionally considered a growth sector. Top holdings – including Apple (AAPL), Microsoft (MSFT), Amazon.com (AMZN) and Google parent Alphabet (GOOGL) – look like what you'd typically see atop a blended large-cap fund.

There's a good lesson here: Some funds determine value differently, so it pays to check under the hood. That's not to say that FVAL's way of gauging value is any better or worse than VTV or the rest of the value ETFs on this list … it's just to say that you should always check out what's under the hood.

To Fidelity Value Factor's credit, this methodology has worked out for the young fund, which came to life in September 2016. Its three-year average annual return of 15.1% is better than 89% of its peers.

Learn more about FVAL at the Fidelity provider site.

• Assets under management: $333.2 million
• Dividend yield: 1.0%
• Expenses: 0.39%

While we're on the topic of different valuation methods, let's look at another young fund: the Distillate U.S. Fundamental Stability & Value ETF (DSTL, $41.11), which launched on Oct. 23, 2018.

Many value ETFs (including VTV and FVAL) utilize metrics such as P/E and P/S to measure value. However, DSTL is hyper-focused on free cash flow (the cash profits left over after a company does any capital spending necessary to maintain the business) divided by its enterprise value (another way to measure a company's size that starts with market capitalization, then factors in debt owed and cash on hand).

This "free cash flow yield" is much more reliable than valuations based on earnings, says Thomas Cole, CEO and co-founder of Distillate Capital. That's because companies tend to report multiple types of profits – ones that comply with generally accepted accounting principles (GAAP), but increasingly, ones that don't, too.

DSTL starts out with 500 of the largest U.S. companies, then weeds out ones that are expensive based on its definition of value, as well as those with high debt and/or volatile cash flows. Like FVAL, the resulting portfolio has a few eyebrow-raisers, including information technology as the largest holding at 23% of assets, and top-10 holdings including the likes of Facebook (FB) and Home Depot (HD).

But it's hard to argue with performance. While DSTL is roughly middle-of-the-pack over the past year, since inception, it has outperformed the S&P 500 by about 20 percentage points and many large-cap value ETFs by between 30 and 40 percentage points. Thus, we have kept DSTL in our annual list of the best ETFs to buy for yet another year.

"We think value works. We don't think it ever really stopped working," says Thomas Cole, CEO and co-founder of Distillate Capital. "What has stopped working are the metrics that legacy value investors have been most associated with."

Learn more about DSTL at the Distillate Capital provider site.

• Assets under management: $130.6 million
• Dividend yield: 2.2%
• Expenses: 0.13%

Some investors like to keep things simple and familiar – say, investing in value stocks from the well-worn S&P 500.

But several funds offer this kind of exposure. The Invesco S&P 500 Enhanced Value ETF (SPVU, $43.02) stands out for its relative aggressiveness.

Nothing in the methodology really screams out. The index provider, S&P Dow Jones Indices, evaluates the P/B, trailing P/E and P/S of all S&P 500 companies and generates a "value score" based on those metrics. It then selects the 100 best-scoring stocks to put in SPVU's underlying index, and companies are then weighted by multiplying their market cap and value score.

However, while SPVU's longer-term performance is roughly on par with other S&P 500 value ETFs, it tends to get there on different flights. Namely, SPVU tends to dip deeper when value is weak, but explode higher when value is back in style. That includes in 2020, when it dropped peak-to-trough by 10 percentage points more than its peers, but also since then, rebounding by about 35 percentage points better.

Invesco's fund is split roughly 70/30 between large and mid-cap stocks, and it has a heavy overweight in financials (43% of assets). The only other double-digit holding is healthcare at 17%, with consumer discretionary and energy each getting 9% weights. Top holdings at the moment include Bank of America (BAC) and Exxon Mobil (XOM), each of which command more than 5% of assets.

Learn more about SPVU at the Invesco provider site.

• Assets under management: $4.4 billion
• Dividend yield: 2.2%
• Expenses: 0.07%

If you wrap yourself in large, blue-chip stocks like a warm blanket, the Vanguard Mega Cap Value ETF (MGV, $100.28) is likely your style.

There's nothing subtle about MGV. The fund simply tracks a basket of the largest U.S. stocks by market capitalization. While a mega-cap stock traditionally is thought to be $200 billion or larger, the average size of MGV's holdings is currently around $144 billion – still gigantic. And like VTV, value is determined by P/B, forward P/E, historical P/E, P/S and P/D.

Top holdings are exactly what you'd imagine: a who's who of gigantic value names. Berkshire Hathaway. JPMorgan Chase. Johnson & Johnson. And this focus on mega-cap value also results in a dividend yield that's decently higher than the 1.5% paid out by the S&P 500.

There are a few surprises at the butt end of the holdings list, most notably a small investment in $34 billion Rocket Cos. (RKT). However, positions like these are marginal, providing very little push or pull on the ETF.

Like the rest of these value ETFs, sector weightings might change over time depending on how the market prices them, but currently financials lead at 24% of assets, followed by healthcare (21%), industrials (14%) and consumer staples (11%).

And with most things Vanguard, MGV won't cost you much to hold, at just 7 basis points in annual expenses.

Learn more about MGV at the Vanguard provider site.

• Assets under management: $947.4 million
• Dividend yield: 1.3%
• Expenses: 0.35%

Increasingly, investors are becoming interested in companies that are trying to "do better" – whether it's by their employees or the world around them. That has led to an explosion in popularity of products centered around environmental, social and corporate governance (ESG) qualities.

The Nuveen ESG Large-Cap Value ETF (NULV, $37.98) is one such product, blending the value factor with ESG qualities. Specifically, NULV tracks the TIAA ESG USA Large-Cap Value Index, which includes equities that "adhere to predetermined ESG, controversial business involvement and low-carbon screening criteria."

The name says "large-cap," and indeed, nearly three-quarters of the portfolio is invested in large companies. However, the remaining quarter is invested into mid-caps, which typically are considered "growthier" than their bigger brethren.

Like many of the other value ETFs on this list, financials are the largest sector weight, at 21% of assets. NULV also provides decent-sized exposure to healthcare (15%), industrials (14%), technology (13%) and consumer staples (12%). The nearly 190-stock portfolio isn't terribly lopsided, either – top three holdings Procter & Gamble (PG), Home Depot and Coca-Cola (KO) collectively make up less than 8% of assets.

Learn more about NULV at the Nuveen provider site.

• Assets under management: $13.9 billion
• Dividend yield: 1.4%
• Expenses: 0.24%

Some investors might prefer a more concentrated portfolio of mid-caps. And why not? Mid-cap stocks are often considered a "goldilocks" investment – they typically have greater resources and access to capital than small caps, but they frequently boast better growth potential than larger firms.

And for that, we're going to look to another popular source of low-cost core products: iShares.

The iShares Russell Mid-Cap Value (IWS, $114.17) is a wide collection of roughly 700 U.S. mid-cap stocks that feature lower price-to-book metrics than their peers. However, the fund also boasts lower P/E and P/S ratios than the category average, and a higher yield to boot, even though those metrics aren't part of IWS's value methodology.

The sector breakdown here is a bit different than the other funds we've looked at so far. While industrials (16%) and financials (16%) aren't much of a surprise as far as weightings go, you do get much more exposure to consumer discretionary (14%) and real estate (10%) than you do in many large-cap value ETFs.

Top holdings currently include the likes of Ford (F), paintmaker PPG Industries (PPG) and miner Freeport-McMoRan (FCX).

Learn more about IWS at the iShares provider site.

• Assets under management: $4.0 billion
• Dividend yield: 1.2%
• Expenses: 0.15%

While small-cap stocks are typically renowned for their growth potential, some experts believe that there's room for a value component when investing in small companies.

To scratch that itch, we'll tap State Street's SPDR line of ETFs.

The SPDR S&P 600 Small Cap Value ETF (SLYV, $84.06) is a simple slice-and-dice of the S&P Small Cap 600 Index, which includes U.S. companies typically between $600 million and $2.4 billion in market value. SLYV is looking for stocks that have attractive valuations based on P/B, P/E and P/S.

At the moment, most of the S&P 600 qualifies – SLYV holds 475 stocks with an average P/E of about 15. You're deeply invested in financials here, at 25% of the portfolio, with significant holdings in industrials (18%) and consumer discretionary (15%), as well as a decent slug in real estate (9%).

Holdings here tend to fall under the radar compared to those in the aforementioned value ETFs. You might not know top-10 holdings such as regional banks Ameris Bancorp (ABCB) and Pacific Premier Bancorp (PPBI). But you might be more familiar with struggling retailers Macy's (M) and GameStop (GME), which sit atop the list. Either way, you don't have to worry about any one name making or breaking SLYV's performance – no single holding accounts for more than 1% of assets.

Learn more about SLYV at the SPDR provider site.

• Assets under management: $48.2 million
• Dividend yield: 1.3%
• Expenses: 0.80%

A more aggressive take on the small-cap value front is the Roundhill Acquirers Deep Value ETF (DEEP, $35.75), which targets "deeply undervalued small-and-microcap stocks."

It does so using "The Acquirer's Multiple" – a valuation metric published in 2014 by Tobias Carlisle, founder and managing director of Acquirers Funds. Like with DSTL, The Acquirer's Multiple focuses on enterprise value, but instead divides it by operating earnings. According to the site dedicated to this multiple:

"Calculating operating earnings from the top down standardizes the metric, making a comparison across companies, industries and sectors possible, and, by excluding special items – earnings that a company does not expect to recur in future years – ensures that these earnings are related only to operations."

This 100-stock portfolio has a small amount (5%) of mid-cap exposure, but is primarily small caps (78%) and microcaps (17%). The portfolio is balanced across stocks, with each holding set at a 1% weight at every quarterly rebalancing; top holdings such as Big 5 Sporting Goods (BGFV) and bottle manufacturer O-I Glass (OI) are closer to 1.5% thanks to their share movements since the last rebalance.

But DEEP is significantly lopsided from a sector perspective, at least at the moment. Slightly more than a third of assets are invested in the financial sector, with another 24% to industrials and 16% in consumer discretionary stocks. The remaining quarter or so of the fund is scattered amongst the other seven GICS sectors.

Unsurprisingly, this aggressive approach can go sideways; Roundhill's fund wildly outperformed both broad small-cap and value indices in 2019 and 2020, for instance. But in an environment that has greatly rewarded both styles, DEEP has thrived – it's up 95% over the past year, versus 76% for the small-cap Russell 2000 and roughly 50% for larger-cap value funds.

Just note that you'll pay for the strategy, with expenses of 0.8% on the pricey side for an index fund.

Learn more about DEEP at the Roundhill Investments provider site.

• Assets under management: $72.8 million
• Dividend yield: 2.8%
• Expenses: 0.47%

The overarching connection among the other best value ETFs on this list has been their focus on domestic equities. But international diversification is important, and you can achieve that with a value tilt via the FlexShares International Quality Dividend Defensive ETF (IQDE, $24.32).

While the IQDE isn't a value ETF in ideology, Morningstar categorizes it within Foreign Large Value, and its methodology typically results in a value-focused portfolio. At the moment, about half of assets are invested in value stocks, with another 37% in "core" and 13% in growth.

IQDE takes a group of international dividend payers and scores them based on management efficiency, profitability and cash flow, then further filters for dividend quality. It then applies various diversification controls so no single stock, industry group, sector, country, region and other factors are over-represented.

That doesn't mean IQDE is a perfectly balanced fund. Countries such as Japan (12%) and the U.K. (10%) have more sway than, say, India (5%) and France (4%). There's not a ton of size diversification, either, as the portfolio is about 80% large-caps with the remainder in mid-sized firms.

Sector weightings are pretty well-distributed, however; financials are the top weight at just 17%, followed by consumer discretionary (11%) and information technology (10%).

If you're looking for a more traditional foreign value fund, you could always look at the likes of iShares MSCI EAFE Value ETF (EFV) or Fidelity International Value Factor ETF (FIVA). But if you're not as concerned with purity, IQDE provides ample value exposure while also providing defense and dividends.

Learn more about IQDE at the FlexShares provider site.

When it comes to personal finance, at least one good thing has come out of the pandemic: Women are becoming more focused on their financial futures. In Own Your Worth 2020, a survey on women and money from UBS, 63% of women said that COVID has affected how they think about money, and they’re more likely to discuss issues such as financial reviews and investing with their spouses and children. In a study by Fidelity Investments, 67% of women interviewed said they are more engaged in managing their money and have expanded their efforts to help shore up their finances. And attendance is up at women’s investing events on Meetup, the online networking site, with 150 groups focusing on women and investing.

That could represent the start of a major shift. Over the years, there has been a persistent confidence gap between men and women when it comes to investing. The UBS study found that half of married women still defer to their spouses when it comes to long-term planning and investing. That applies to women of all ages, education and income levels. And single women feel less confident about making long-term financial decisions than single men.

In addition, a big chunk of the investments women have is concentrated in retirement accounts.

Why the gap? Besides the confidence factor, a number of reasons have been suggested to explain the gap. “When you ask women why they defer to their spouses, they cite things like entrenched roles within the family, a desire to keep peace in the relationship and a belief that their spouse knows more,” says Julie Fox of UBS Private Wealth Management.

How do you help women feel more comfortable? “I start by telling women how investing, rather than just saving, can help them reach their goals, and what they can do with money as they grow wealth,” says Erin Lowry, author of Broke Millennial Takes on Investing. Fox advises starting with small steps. “Just having a financial discussion with your spouse or being at the table with an adviser is helpful,” she says.

Gerri Walsh, president of the Finra Foundation, says there appears to be a connection between confidence and knowledge, so beefing up financial education plays a key role (you’ll find tools and resources at finra.org/investors). Walsh says hands-on learning, videos and workplace financial education are particularly effective. (Fidelity sponsors a workplace-based program called Women Talk Money.) And having a coach can change behavior, she says.

Based on what I hear from my readers, it often helps if that coach is another woman. “Some financially savvy friends gave me the name of a female adviser, and I’ve been happy ever since,” writes Lynne Derry. “I am happy with a balanced portfolio, and now I have a few friends to talk to about investments.”

Maureen Larkin was introduced to the world of money by a woman she met at her second adult job. Fast forward 30 years, and Larkin is “very confident and secure managing all our family finances and investments,” she says. “And I’m doing a dang good job of it.”

When an unfamiliar name pops up as a top performer, we’ll often take a closer look. It turns out that the fund in question, Aspiration Redwood (symbol REDWX), features a couple of investor-friendly benefits. Despite a tiny asset base of $16 million, the fund’s annual expense ratio is just 0.50%. And it requires just $100 to start.

Aspiration CEO Andrei Cherny says his firm is seeking to bring socially responsible investing to a wider audience. This power-to-the-people attitude explains the bite-size minimum, but what about the low fees? The fund’s costs are substantially greater than 0.50%, but for now Aspiration is capping the fees it charges shareholders at that level.

Bruno Bertocci and Thomas Digenan, of UBS Asset Management, run Redwood. To be considered, a firm must score high marks among its peers for its environmental, social and governance practices (one thing the fund looks for is diverse leadership). For the most part, the fund won’t invest in companies involved in fossil fuels, nor those in other blemished sectors, such as tobacco, alcohol and firearms. Beyond that, the managers seek firms with competitive advantages, talented executives and cheap share prices. The fund held 26 stocks at last word, with consumer-goods firm Newell Brands, drugmaker Eli Lilly and insurer Allstate holding the top slots.

There are 30 stocks in the Dow Jones Industrial Average, and Warren Buffett's Berkshire Hathaway (symbol BRK.B) has stakes in 11 of them. But as prescient as the Oracle of Omaha has proved to be over the years, that doesn’t mean you should run out and buy all of the stocks today.

In some cases, the shares are much pricier now than when Buffett first purchased them. In other cases, the holdings are relatively small and getting smaller. "Any Berkshire investment worth less than $100 million, I ignore," says David Kass, a professor at the University of Maryland's Robert H. Smith School of Business who studies Buffett and is a Berkshire shareholder.

More often than not, Buffett doesn't comment on his investment moves, so it’s not always possible to know his reasoning behind a big stock purchase or sale. But for buy-and-hold investors, Berkshire’s stakes in blue-chip companies can be instructive nonetheless. Here’s a closer look at the 11 Dow stocks owned by Warren Buffett.

Data is as of February 13, 2017, unless otherwise indicated. Click on symbol links in each slide for current share prices and more.

Stocks are listed alphabetically. Analysts' estimates and ratings are from Zacks Investment Research and Thomson Reuters. Berkshire’s stake in each company is based on the latest 13-F filing with the SEC and represents the number of shares owned as of December 31, 2016.

• Symbol: AXP
• Share price: $78.91
• Berkshire’s stake: 151.6 million shares
• Dividend yield: 1.5%

Look no further than American Express to understand just how serious Warren Buffett is about investing for the long haul. He picked up his initial stake in the credit card company in 1991, when a struggling AmEx badly needed capital. Berkshire obliged, getting favorable terms on its investment. As of December 31, 2016, Berkshire owned 16.6% of AmEx’s outstanding shares. Buffett has played the role of white knight many times over the years, including during the 2008 financial crisis, as a means to get stakes in good companies at a discount.

• The stock today: AmEx shares change hands at 14 times expected earnings for 2017, according to a survey of analysts by Thomson Reuters. That's in line with the stock's five-year average. Although the stock doesn't look particularly cheap, neither does it look expensive. Based on current estimates, the price/earnings ratio of the broader Standard & Poor’s 500-stock index is about 17. Analysts at William Blair Equity Research say the diversity of AmEx's business is underappreciated. The firm has a rating of "outperform" (buy, essentially) on the stock.

• Symbol: AAPL
• Share price: $133.29
• Berkshire’s stake: 57.4 million shares
• Dividend yield: 1.7%

Buffett doesn’t deserve all the credit for all of Berkshire’s investments. In fact, the decision to buy Apple shares last year was made by one of Buffett's stock-picking lieutenants. Apple does have some of the attributes Buffett has said he likes: It's a leader in its market, and it has a ton of cash at its disposal. The stock was also trading at lower levels when Berkshire did its buying throughout 2016.

• The stock today: With shares reaching new highs, Apple is much more expensive now than it was when Berkshire first took a stake. But UBS analysts say the price gain is deserved because the number of iPhones in use continues to grow by double-digit percentages and retention rates remain high. UBS rates Apple stock a "buy," but picking up shares on dips over time might be preferable to going all in at today’s record prices.

• Symbol: KO
• Share price: $40.62
• Berkshire’s stake: 400.0 million shares
• Dividend yield: 3.4%

Buffett famously watched Coca-Cola for 52 years before investing in the stock. He finally took the plunge in 1988. “We expect to hold these securities for a long time,” Buffett wrote back then of his new stake in Coke in a letter to Berkshire shareholders. “In fact, when we own portions of outstanding businesses with outstanding managements, our favorite holding period is forever.” As of December 31, 2016, Berkshire owned 9.4% of Coca-Cola’s outstanding shares.

• The stock today: Coca-Cola currently trades at 21 times expected earnings. That's a bit rich, given that analysts project average earnings growth of just 2% a year for the next five years, according to Thomson Reuters. Analysts at Credit Suisse have a "neutral" rating on the stock (hold, essentially), saying they have concerns about an expansion of global regulations on sweetened products. If you already own the stock, find comfort in a plump dividend that has increased 54 years in a row.

• Symbol: GE
• Share price: $30.04
• Berkshire’s stake: 10.6 million shares
• Dividend yield: 3.1%

Berkshire’s stake can be traced back to the lifeline that Buffett threw to General Electric in 2008. At the time, GE’s finance arm was suffering the same as other big banks. "The GE investment resulted from Buffett's reputation and personal relationships, and Berkshire's very large cash position during the financial crisis," Kass says. But Buffett wouldn't have stepped in if he didn't believe in the company. "GE is the symbol of American business to the world," Buffett said at the time. "I am confident that GE will continue to be successful in the years to come." Berkshire received preferred shares and warrants in exchange for cash. The preferred shares paid handsome dividends until GE later bought them back, and the warrants gave Berkshire the right to buy GE common shares at below-market prices.

The stock today: Although GE's earnings for the quarter that ended Dec. 31 missed their estimate, analysts at UBS maintained a "buy" rating on the stock. The firm believes that cost cuts and wider profit margins will help GE's stock outperform the S&P 500 this year, as the company continues to streamline and restructure its operations.

• Symbol: GS
• Share price: $246.27
• Berkshire’s stake: 11.0 million shares
• Dividend yield: 1.1%

Goldman Sachs is another holding Berkshire picked up during the 2008 financial crisis. Buffett paid $5 billion for preferred shares and warrants to purchase common stock. The preferred shares came with a dividend yield of 10%. Buffett said the investments in Goldman Sachs and General Electric – and similar deals with Dow Chemical, Swiss Re and Wrigley – delivered a total of $2.1 billion annually in dividends and interest. Berkshire bought another $2 billion in Goldman stock when it exercised the warrants in 2013. Goldman redeemed its preferred shares in 2011.

• The stock today: Credit Suisse analysts rate Goldman shares at "outperform," thanks in large part to the potential for lower corporate taxes and loosened financial regulations under the Trump administration. Not everyone is as enthusiastic about the stock, however, especially in light of its 35% share-price gain since Election Day. Of the 18 analysts surveyed by Zacks, seven have Goldman at "strong buy," two rate it a "buy," eight rate it a "hold" and one has a "strong sell" recommendation on the shares.

• Symbol: IBM
• Share price: $179.36
• Berkshire’s stake: 81.2 million shares
• Dividend yield: 3.1%

Longtime Berkshire watchers were surprised when the company revealed this stake in 2011 because Buffett had shown little interest in technology stocks. But after reading IBM’s annual reports for more than 50 years without buying a single share, he was finally swayed by what he saw closer to home. "We went around to all of our companies to see how their IT departments functioned ... and I just came away with a different view of the position that IBM holds within IT departments and why they hold it and the stickiness and a whole bunch of things," Buffett said at the time. Berkshire owned 8.5% of IBM’s outstanding shares as of December 31, 2016.

• The stock today: UBS is "neutral" on IBM, but it says better times might be ahead now that a period of heavy investment back into the business is slowing down. Cost cuts will bolster the bottom line, and the company's Watson cognitive computing division is showing early promise. Buffett-like patience might be required, though, considering that the stock price has been stagnant for the past five years. IBM’s solid dividend yield helps.

• Symbol: JNJ
• Share price: $115.88
• Berkshire’s stake: 327,100 shares
• Dividend yield: 2.7%

During the 2008 financial crisis, Buffett reluctantly sold Johnson & Johnson shares to raise cash to invest in Goldman Sachs, GE and other struggling companies. By 2012, the reluctance had disappeared and Berkshire had essentially dumped its position in J&J, with Buffett saying the company was "messed up in a lot of ways" due to production problems and recalls. Despite the shift in sentiment, Kass says Berkshire’s initial foray into J&J made sense because the stock was undervalued at the time.

• The stock today: The outlook for J&J is brighter these days than it was when Buffett abandoned ship, though the majority of analysts who follow the company are content to stand pat for now. Of the 18 analysts surveyed by Zacks, 10 rate it at “hold.” Seven consider the stock a “buy” or “strong buy” and just one calls it a “sell.” Income investors can rest easy. The dividend is as secure as it can be, having been raised every year for 54 straight years.

• Symbol: PG
• Share price: $88.31
• Berkshire’s stake: 315,400 shares
• Dividend yield: 3.0%

Berkshire was a longtime shareholder in Gillette when Procter & Gamble acquired the razor blade company in 2005. Buffett called it a "dream deal," as Berkshire received P&G shares in exchange for its Gillette holdings. As with Johnson & Johnson, Buffett reluctantly sold some P&G shares in 2008 to raise cash to invest in distressed companies. Cut to 2014. Berkshire struck a deal to buy Duracell from P&G. To avoid a big tax bill, Berkshire arranged to hand over P&G shares rather than pay cash for Duracell.

• The stock today: William Blair Equity Research rates P&G at "outperform," noting that its focus on major brands, such as Tide detergent, and cost cuts offer "a solid total shareholder return opportunity." Shares are not on sale, however, trading at 21 times year-ahead earnings. For comparison, the S&P 500 trades at 17 times future earnings. P&G’s dividend is the definition of reliable; it dates back to 1891.

• Symbol: V
• Share price: $86.44
• Berkshire’s stake: 10.6 million shares
• Dividend yield: 0.7%

Credit cards are a Berkshire staple. The holding company also owns stakes in MasterCard and the aforementioned America Express. But Visa and MasterCard are growing faster than AmEx, says Kass, and both are investments of Todd Combs, one of Berkshire’s chief investing strategists not named Warren. Payments processing is a rapidly expanding market, thanks to the emergence of mobile payments, such as Apple Pay. Global revenue from mobile payments is forecast to exceed $1 trillion by 2019, up from $450 billion in 2015, according to Statista, a data research firm.

• The stock today: "On the heels of solid December quarter results, we are raising our estimates and reiterate our Outperform rating on Visa," says Credit Suisse. "We believe shares are attractively valued at 21 times ... calendar 2018 earnings." And while the dividend yield is nothing to write home about, Visa shares have proved their long-term worth by outpacing rivals MasterCard and AmEx in price growth over the past two, five and 10 years.

• Symbol: VZ
• Share price: $86.44
• Berkshire’s stake: 928 shares
• Dividend yield: 4.7%

Verizon seemed like an unlikely bet for Buffett. Its future is hitched to growth in digital mobile content and advertising, which makes it something of a bet on tech. That's why it probably wasn't a Buffett call. "Verizon is likely an investment of Todd Combs or Ted Weschler, who have several telecom stocks in their portfolio," says Kass of Buffett’s two chief stock-picking lieutenants. Either way, the foray was short-lived: Berkshire all but abandoned its Verizon position by the end of 2016, selling almost all of its 15 million shares.

• The stock today: The first thing that stands out with Verizon is the high dividend yield. Even better for income investors is the fact that the company has raised its payout every year since 2006. However, most analysts think the stock will underperform the S&P 500 this year. Of the 25 analysts surveyed by Zacks, 18 rate the shares at "hold," five have it at "buy" or “strong buy,” and two rate it at "sell." William Blair Equity Research, which rates the company at "market perform" (hold, essentially), notes that intense competition among telecoms is hurting financial results of late. Verizon bought AOL in 2015 to beef up its mobile content and advertising technology, but its pending deal to acquire Yahoo faces uncertainty after Yahoo disclosed serious security breaches that exposed user information to hackers.

TAKE THE QUIZ: How Well Do You Really Know Warren Buffett?

• Symbol: WMT
• Share price: $67.77
• Berkshire’s stake: 1.4 million shares
• Dividend yield: 3.0%

Buffett sold off big chunks of Berkshire’s Walmart stake last year. That’s because the retailer is losing out to Amazon.com, Kass says. Buffett has made no secret of his admiration for Amazon's CEO, Jeff Bezos. "We haven't seen many businessmen like him,” Buffett says of Bezos. “Overwhelmingly, he's taken things you and I've been buying and he's figured out a way to make us happier buying those products, either by fast delivery or prices or whatever it may be, and that's remarkable."

• The stock today: Berkshire first bought Walmart in 2005, and it has been a disappointing investment. Shares in the world’s largest retailer have gained 32% on a price basis since mid 2005. The S&P 500 is up 80% over the same time frame. Analysts at Stifel have a “hold” recommendation on Walmart shares. “We think a continued focus on grocery, including improved online and mobile ordering and increased offerings of more healthful products (i.e., organic), will continue to drive modest share gains,” Stifel analysts say.

Shares in Warren Buffett's Berkshire Hathaway (symbols BRK.A and BRK.B) enjoyed a market-beating 2016. The lower-priced and more actively traded Class B shares surged 23.4% last year, compared with a 9.5% gain for Standard & Poor’s 500-stock index. Some who follow the company think investors can look forward to more of the same this year.

"We expect the outperformance to continue in 2017 as the outlook for [Berkshire's] major segments improves and upside remains from corporate tax reform and infrastructure spending," wrote UBS analyst Brian Meredith in a recent research note.

Buffett’s decades-long track record of success is reason enough to invest in Berkshire, but the 86-year-old won't be around forever. (Buffett’s successor has been chosen, according to the company, though the identity of the pick hasn’t been revealed publicly.) So here are three good reasons other than Buffett to invest in Berkshire Hathaway's stock right now.

Berkshire is a conglomerate that owns dozens of businesses. Among the most notable is Geico, the popular auto insurer. But its non­insurance businesses have become much more important to the bottom line. According to UBS, non-insurance businesses – everything from railroads to specialty manufacturers – have gone from accounting for less than 5% of pretax earnings a decade ago to almost 75% today.

Conditions are ripe for Berkshire’s so-called Powerhouse Six non-insurance businesses to perform well in 2017, says David Kass, a professor at the University of Maryland's Robert H. Smith School of Business who studies Buffett and is a Berkshire shareholder.

"The 'Powerhouse Six,' which consists of its BNSF railroad [Burlington Northern Santa Fe], Berkshire Hathaway Energy, Marmon, Lubrizol, IMC and Precision Castparts, represent the bulk of its non-insurance earnings," Kass says. "BNSF results should improve in 2017 with increasing rail volumes. Manufacturing operations should also improve along with the energy sector and the improving economy in 2017."

As diversified as Berkshire is, its insurance businesses, led by Geico, are still critical to its financial health. Although the auto insurer struggled in 2016, the business is moving in the right direction. "We foresee results improving at Geico as rate increases continue," according to UBS, which noted that revenue increased 13.6% year-over-year in the third quarter of 2016, after averaging 11.5% quarterly growth in the first half of the year.

Meanwhile, Berkshire Hathaway Re continues to find opportunities in the reinsurance market, which involves selling insurance to other insurers to mitigate risk. American International Group (AIG), for example, recently paid Berkshire about $10 billion to take responsibility for some AIG insurance claims if they run unexpectedly high.

UBS says the market is not pricing in the improving outlook for Berkshire's various operating segments. Kass agrees: "At Berkshire Hathaway's current price of about $240,000 per Class A share, it is being valued by the market at less than 1.5 times its book value, which is below its 30-year historical average of 1.6." Book value (assets minus liabilities) is Buffett's preferred measure of Berkshire's performance.

The three analysts tracked by Zacks Investment Research who follow Berkshire have a "strong buy" recommendation on the stock. The Class B shares ended trading on January 26 at $164.92.

Kass adds that Berkshire has at least $65 billion available for one or more large acquisitions in 2017, which could add substantially to its profits this year and beyond. In 2016, Berkshire acquired manufacturer Precision Castparts in a deal valued at $37.2 billion.