During 2025, the US stock market has experienced some of the most dramatic price swings in over 50 years. Faced with so much uncertainty, many investors have been whipsawed by retreating into cash at just the wrong time or by hunkering down in low-risk, low-growth stocks and market sectors.
But top fund manager Justin White of T. Rowe Price, says investors who are waiting for the all-clear signal are missing out on potential compelling opportunities. He has shown a propensity for steering a profitable course through turbulent markets. His portfolio returns are ahead of those of the S&P 500 index so far this year, and he’s compiled one of the finest records on Wall Street over the past decade, beating the index by nearly three percentage points annually.
Bottom Line Personal spoke to White to find out his strategies in the current market for picking winning stocks…
HOW I’M INVESTING NOW
I am cautiously optimistic. The stock market pulled back from the brink of a recession earlier this year, but the situation isn’t easily resolved. We could be stuck in a chaotic environment and heightened volatility for a long time. Here is my playbook for these highly uncertain times…
Use the “Four Pillars.”
In unpredictable environments, it pays to remember the obvious—stock prices are a function of supply and demand. What that means: A stock’s share price rises when lots of investors have a good reason to buy it and those who already own it don’t want to sell until the price is a little bit higher. To increase my chances of success, I look for stocks with especially appealing characteristics for buyers. I call these the Four Pillars…
Pillar#1: Is it a high-quality company? This goes beyond typical blue-chip companies. I want to see a business that has long-term advantages over competitors…experienced management that makes smart decisions and allocates capital well…and products and services with high profit margins.
Pillar #2: Is the company surpassing expectations? I look for businesses in which estimates of future earnings, sales and free cash flow are above the consensus of financial analysts. In other words, Wall Street is underestimating how well these companies can perform.
Pillar #3: Are the numbers getting better? I want to see fundamentals improving. Examples: Is revenue growth accelerating from 5% to 15% on a year-over-year basis? Are profit margins expanding?
Pillar #4: Are valuations reasonable? This doesn’t just mean looking for cheap stocks with low price-to-earnings ratios. For me, this is about growth at a reasonable price. I want to identify stocks that are undervalued relative to their potential.
Here are three stocks that look attractive now based on the Four Pillars…
Carvana (CVNA) revolutionized buying, selling and financing used cars by building an online marketplace and logistics business that bypassed traditional dealerships. The e-commerce platform sold 416,000 cars last year and has penetrated only 1.5% of the market. Eventually, I believe the company can capture 15% to 20% of the market. Carvana won’t be directly impacted by tariffs on new imported cars. If new-car prices rise, used-car prices become more appealing. Recent share price: $292.71.*
Charles Schwab (SCHW) is one of the largest retail-oriented financial-services companies in the US, with $10.1 trillion in client assets across its brokerage, banking and asset-management businesses. The firm also is a dominant player in registered investment advisor (RIA) custody, with nearly 60% of RIAs using Schwab as a custodian. It has recently pushed into robo-advisory and other managed-investment solutions. Perhaps most importantly, Schwab’s net interest margin—the spread between what it pays on client cash balances versus the yield it can earn in the bond market—is expanding in this higher-for-longer rate environment. Recent share price: $89.42.
Microsoft (MSFT). The iconic computer company has emerged as a leader in artificial intelligence (AI) and cloud computing. The centerpiece is Azure, its cloud platform that allows businesses to run their own applications, store data and use a range of software tools. Even if IT spending slows during a recession, Microsoft should come out stronger on the other side. The company has a monopoly in critical software niches such as its operating system and Office suite, which serve as cash cows to help drive Azure’s expansion. Recent share price: $479.89
Look for durable growers
With so many wild cards affecting the economy, I look for stocks that are likely to grow earnings no matter what happens. Two durable growers now…
Fair Isaac Corp. (FICO). If you ever took out a loan, you are familiar with the signature product of this financial-analytics company. Its three-digit FICO score is used by nearly all banks and other lenders in the US to determine applicants’ creditworthiness for mortgages, credit cards, and auto and personal loans. It’s a lucrative business with high profit margins, growing revenues and pricing power. Recent share price: $24.51.
Netflix (NFLX) is one of my top 10 holdings. It has more than 300 million subscribers globally…and it can continue to dominate because it runs on a reinforcing cycle of growth in which more subscribers mean more money to spend on content…which in turn attracts even more users. The rollout of cheaper subscription plans and ad-supported plans has company executives targeting a $1 trillion market capitalization by year-end 2030. Recent share price: $1,219.53.
Capitalize on the “knowables.” While President Trump has created market turmoil with his on-again, off-again tariff policies, there are two areas in which his agenda and actions have been more consistent and provide a tailwind for select companies. They include…
Deregulation in the financial-services industry. Regulators appointed by the President are easing or eliminating red tape and reporting requirements. That translates into lower compliance costs and boosts corporate profitability. One bank stock that benefits from a friendlier regulator policy…
Bank of America (BAC), one of the nation’s preeminent US banking franchises, has more than $3.2 trillion in assets and $2 trillion in deposits. It’s a Tier 1 investment bank and a top US credit card issuer, and it owns the Merrill Lynch brokerage and advisory firm. Deregulation will enable Bank of America to hold lower capital levels, which should improve returns. And expanding net interest margins are a tailwind. Recent share price: $44.73.
Large federal deficit spending, which is likely to keep inflation elevated. The Republican tax bill is projected to add at least $3.8 trillion to the federal deficit over 10 years, largely due to the cost of extending the 2017 tax cuts. Two companies that have pricing power and can do well even with inflation at higher levels…
Chubb Ltd. (CB) is the world’s largest publicly traded provider of property-and-casualty insurance policies based on market capitalization. This type of coverage is crucial for customers in all kinds of economic environments. Because contracts typically run for a year, the company can reprice them to keep up with inflation. It’s a resilient business with steady growth, and the company maintains one of the industry’s strictest underwriting policies. Recent share price: $287.59.
Visa (V), the largest payment processor in the world, partners with banks and credit unions to provide 4.3 billion debit and credit cards to members. In fiscal year 2024, Visa collected fees on more than 233 billion transactions. I see a long growth runway for electronic payments, which surpassed cash payments on a global basis only a few years ago. Visa benefits from higher inflation because the more prices rise, the more consumers spend in nominal terms. Profit margins at Visa are high enough that even if consumer spending and revenue growth slows, it won’t erode margins or earnings too much. Recent share price: $356.53
Create a “too hard” pile
Warren Buffett once famously said, “I don’t look to jump over seven-foot bars; I look around for one-foot bars that I can step over.” If too many unknowables surround a stock, I pass on it and won’t commit new investment money. A lot of stocks affected by potential tariffs go in this pile, as do health-care stocks, which face regulatory pressures. Three stocks in my “too hard” pile now…
Alphabet. The rapid progress in AI has put Google’s parent company in the crosshairs. Chatbots such as ChatGPT and Perplexity are being used as search engines, challenging Alphabet’s dominance in search and threatening its main revenue-producer.
Apple. President Trump threatened Apple with a 25% tariff for any iPhone sold but not made in the US. This may just be a negotiating tactic, and the consumer-electronics giant could earn US tariff exemptions in the long term. But the firm will likely have to raise prices in the US and accelerate its costly transition out of manufacturing in China, which would pressure profitability and efficiency. Other challenges include Apple catching up and perfecting AI to spur another iPhone cycle, trying to sustain demand in China, and the possibility of losing about $20 billion in annual revenue from Alphabet if regulators strike down an agreement that positions Google as the default search engine within Safari on iPhones.
Pharmaceutical stocks. President Trump recently signed an executive order to bring prices that Americans pay for prescription drugs in line with those paid by similar nations or face aggressive measures to significantly reduce the cost for patients and end anticompetitive practices.
*Performance figures are current as of June 16, 2025 and courtesy of Morningstar, Inc.
