The Best Performing Stocks: What to Know Before Investing

Some of the current top-performing stocks include Targa Resources, Howmet Aerospace, Palantir Technologies, and a few strong picks across the energy, tech, and automotive sectors. Just remember that high-performing stocks also come with higher risks, including sharp price swings and industry changes. Before you invest, make sure you understand what you're getting into and that you’re not using money meant for the essentials in your life.

The 7 Highest-Performing Stocks You Should Know About

When people ask about individual stocks, I usually point them toward index funds because they keep things simple and balanced. If you’re set on picking stocks anyway, make sure you understand why certain companies outperform: Strong revenue growth, steady earnings, a strong market position, and supportive industry trends are the usual elements behind sustained performance.

With that in mind, here are seven stocks that have reported impressive returns and what you should know before considering any of them.

1. Targa Resources Corp. (TRGP)

Current Price: $168.61 | 2026 Target: $207-$212

Targa Resources is a midstream energy company that’s been operating since 2005 and focuses on natural gas transportation, processing, and storage. Over the last five years, the stock has delivered more than 600% returns due to reliable cash flow from long-term, fee-based contracts that help shield revenue from major swings in natural gas prices.

Targa’s infrastructure expansion in regions like the Permian Basin has also significantly benefited the company and its 2024 revenue of $16.38 billion highlights just how strong demand has been for its services. If you're looking for exposure to energy without betting directly on oil prices, this is one way to do it.

That said, it still carries notable risks, including exposure to commodity-driven volume changes, shifting regulations around pipelines and emissions that can hurt midstream operations, and geopolitical events that can disrupt energy markets without warning. These factors can influence earnings quickly, so it pays to stay realistic about the potential volatility.

2. Howmet Aerospace Inc. (HWM)

Current Price: $197.93 | 2026 Target: $135-$220 (avg. $181.92)

Howmet produces engineered metal parts for aircraft, engines, and transportation systems, and it’s shown steady growth while serving industries that rely heavily on precision and safety. With more than $6.9 billion in revenue in 2024 and profit margins around 15.5%, the company stands on a strong foundation. The ongoing recovery in global air travel has lifted demand for parts and maintenance, and Howmet has stayed competitive by using advanced manufacturing tools like high-performance alloys and 3D printing.

Even so, its future depends on an industry that runs in cycles: Economic slowdowns can reduce travel and delay new aircraft orders, while rising raw material costs and supply chain disruptions can also create pressure. Howmet remains well-positioned, but investors should recognize how tied it is to greater aerospace trends.

3. Palantir Technologies Inc. (PLTR)

Current Price: $157.98 | 2026 Target: $120-$300+ (wide range)

Palantir is a major player in data analytics and AI software that works with both government agencies and commercial clients. The stock has climbed more than 160% year-to-date (YTD) thanks to strong AI demand and expanding long-term contracts, so the appeal is clear: Palantir sits in a rapidly growing sector, has strong revenue growth at 28% year over year, and benefits from customers who typically renew their contracts.

Unfortunately, it’s also one of the most volatile stocks on this list. Much of its value depends on government contracts, which can change with new budgets or political shifts. Competition in AI is accelerating, and the stock’s valuation already assumes big future growth. If you’re not comfortable with hefty price swings, this one may be too intense.

4. NRG Energy, Inc. (NRG)

Current Price: $160.82 | 2026 Target: ~$197 (16% upside)

NRG Energy is a major power provider involved in electricity generation, retail energy services, and renewable projects. They generate roughly $30 billion in annual revenue and have been improving profitability as they expand into cleaner energy sources while maintaining cash flow from long-standing operations. NRG also offers an appealing dividend, which adds stability for long-term investors.

The tradeoff is the risk that comes with operating in a heavily regulated sector: Energy policy changes can skew revenue expectations, fuel price fluctuations can shift operating costs, and disruptive new technologies can change competitive dynamics. NRG has made progress modernizing its business, but the energy landscape can move quickly.

5. Ciena Corporation (CIEN)

Current Price: $186.10 | 2026 Target: $140-$185

Ciena builds networking equipment that powers cloud computing, AI platforms, and 5G networks. With around $4 billion in yearly revenue and relationships with major telecom providers, the company has a stable base to grow from. Ciena’s position only solidifies as the demand for bandwidth keeps rising; AI requires enormous data capacity, cloud use continues to expand, and 5G adoption is still growing. Since its technology supports all three trends, it sustains a long-term role in the digital infrastructure space.

While all of that can be appealing, it helps to acknowledge the challenges: Networking equipment demand can rise or fall with broader tech spending cycles, competition is fierce among hardware makers, and supply chain bottlenecks can slow product delivery.

6. Sonic Automotive, Inc. (SAH)

Current Price: $60.95 | 2026 Target: $72-$94 (avg. ~$83)

Sonic Automotive operates one of the largest dealership networks in the US, offering new and used cars, service, financing, and parts. The company generates steady revenue (nearly $4 billion) and has strengthened its service operations, which brings in consistent income even when car sales slow down. 

The dealership model gives Sonic a buffer against economic ups and downs because service and repairs stay necessary regardless of new vehicle trends. They’re also in a good position for the shift toward electric vehicles since EVs still need maintenance, software updates, and specialized service.

That being said, the stock is not without its risks, which include economic slowdowns that limit big purchases, rising interest rates that make financing more expensive, and increasing competition from online car sellers and direct-to-consumer EV brands. Sonic can navigate these challenges, but the industry is changing fast.

7. BioCryst Pharmaceuticals, Inc. (BCRX)

Current Price: $7.00 | 2026 Target: $6.50-$20

BioCryst develops oral and injectable treatments for rare diseases and viral infections, bringing in $417 million in revenue in 2024. The company continues to invest heavily in research and development, which means it’s still burning cash as it works to expand its pipeline.

This is the highest-risk stock in the group. Small-cap biotech companies face drug approval hurdles, uncertain pipeline timelines, and competition from larger pharmaceutical firms with deeper resources. Some analysts expect slow revenue growth over the next two years (only 6.2%), which adds to the uncertainty.

The upside is that BioCryst has promising approved drugs, government-backed partnerships, and access to a rare disease market that continues to expand. The reward can be meaningful if key programs succeed, but setbacks can erase gains quickly.

How to Actually Measure Stock Performance (Not Just Hope)

Evaluating stocks is easier when you know which numbers matter, so here are the main metrics to help you make a decision:

Total returns tell you what really happened

Look at one-year, five-year, and ten-year returns to understand a stock’s full story, not just recent performance. A company might look great today but still be down over longer periods. Tracking 52-week performance, year-to-date numbers, and long-term averages helps you spot patterns instead of reacting to recent spikes. Different investors aim for different returns, so it helps to know what level of growth you’re aiming for before committing money.

Compare to indexes, not to your hopes

A 7% return only looks impressive if the market did worse; if the S&P 500 performed better during the same period, you would’ve been better off choosing a simple index fund. Broad benchmarks like the S&P 500 or Dow Jones give you a baseline for judging whether a stock is truly outperforming or simply lagging behind in a rising market.

Price-to-earnings (P/E) ratio shows if you're overpaying

The P/E ratio compares a stock’s price to its earnings per share and helps you figure out whether the market is valuing the company fairly. A high P/E can reflect optimism about future growth, while a low P/E can signal potential undervaluation or underlying problems. It’s important to compare P/E ratios within the same industry because different sectors naturally trade at different levels; tech companies, for example, typically have higher P/E ratios than utilities.

Debt-to-equity ratio reveals financial health

Even profitable companies can be drowning in debt. The debt-to-equity ratio shows how heavily a company relies on borrowing to grow: Ratios under 0.1 signal a strong balance sheet, while anything above 0.5 should raise some questions. Companies that grow by relying on debt and borrowing can collapse if interest rates rise or credit conditions tighten, so this metric helps you understand whether growth is sustainable.

5 Stock Investing Tips for Beginners Who Want to Build Real Wealth

Investing can feel overwhelming because there’s too much information, too many conflicting opinions, and real money at stake. It’s easy to freeze or make emotional choices, especially when the market moves fast. These five tips can help you invest with more confidence and less stress:

1. Start with index funds, not individual stocks

I’m serious about this. Index funds offer instant diversification across hundreds of companies and have historically delivered strong long-term returns. The S&P 500 has averaged around 10% return annually, which is pretty solid growth without requiring deep research. Unless you’re ready to study financial statements, track industry trends, and stay updated on company news, index funds will give you better odds. Professionals spend their entire careers analyzing stocks full-time, so competing with them casually doesn’t work in your favor.

2. Diversification isn't optional, it's survival

Don’t put all your money in one stock or even one sector; that’s just exposing yourself to unnecessary risk. When one area drops, your entire portfolio will go with it. Instead, diversification spreads your investments across different industries and types of assets so one bad performer doesn’t wreck your overall progress. Index funds do this automatically, but if you pick stocks yourself, make sure you’re covering multiple sectors like healthcare, energy, tech, consumer goods, and finance.

3. Prepare for losses before they happen

The market will drop at some point, and your investments will lose value. Panicking and selling during a downturn locks in losses and makes recovery harder, so decide ahead of time how much volatility you can tolerate and commit to sticking with your plan. This is why you should only invest money you won’t need for at least three to five years. Short-term bills like your rent for next month and major upcoming expenses like your wedding next year shouldn’t depend on market performance.

4. Avoid short-term trading like it's a casino

Short-term trading and day trading are high-stress activities that destroy wealth for most people. You’re up against algorithms and professionals with better data, and research shows that most day traders actually lose money; the taxes and fees alone can cut into gains. Instead, long-term investing builds wealth more reliably. If you need quick access to cash, a high-yield savings account or certificate of deposit is a safer option.

5. Keep investing over time, even when it's boring

The real wealth comes from consistently adding money to your investments, not from timing the market perfectly. Automating your investments helps you build wealth quietly in the background. This is how 401(k) plans work, and many brokerages offer the same setup for regular investment accounts. Once it’s automated, emotion plays a smaller role and consistency takes over, which leads to better long-term results.

Your Rich Life Comes First, Then Investing

Look, I'm an index fund person because they keep things simple and balanced while delivering reliable long-term growth. Individual stocks require more research, more emotional control, and more risk management than most people are ready for. If you choose to invest in individual stocks, make sure the money you use is money you can afford to lose because if the market dropped 40% tomorrow, your basic needs should still be fully covered. Will you still be able to pay your mortgage? Can you still live your Rich Life?

Investing should support your financial life, not endanger it. Start small, take your time, and avoid putting short-term money into long-term investments. Even the best stocks won’t matter if losing that money disrupts your life.