Climbing the stock market mountain in 2026.
Written by Julian Wheeler – Partner and US Equity Specialist
For this past year, I have been using an analogy of players on an American Football team, creating a formation of stock picks to beat the S&P 500, allowing myself a few changes at ‘Halftime’. The first half of the year was tight, and we were tied at about “+2% All” but from July onwards 4 of my 11 ‘players’ scored big returns and at time of writing (Dec 15th) we are comfortable winners with an average return of 17.64%, beating the index by over 7%.
Source: Bloomberg 16th Dec 2025
So now, following three consecutive years of above average S&P 500 index returns, asking for a fourth represents climbing a steep mountain. For 2026 then, here are three teams to tackle the ascent with different skills to attain the summit next year.
The Climbers (Highest Risk)
The skilled climbers take the highest risk direct route, straight up the North Face. If they don’t fall, then outperformance deckchairs at the summit will be theirs, swigging beers long before the other teams join them.
Team: Mongo DB (MDB), Stellantis (STLA), AURORA (AUR)
Mongo DB is a $30bn+ software provider of databases for unstructured data. That is basically the best mousetrap for Cloud based AI workloads. From their $2bn revenue base camp, they plan to attack Oracle’s installed turf that is 50 times greater. Armed with a new CEO and a better product, I like their chances to chip large chunks off the old block. Even after huge gains this year, the market is yet to fully appreciate their potential.
Stellantis makes the team as a last-minute substitute thanks to the just announced EU decision to cancel the ban on ICE cars in 2035. Pragmatism has trumped idealism: the destruction of the domestic European car industry is going to be avoided. Combined with the repeal of EV tax credits and associated fines for gasoline makers in the USA, it gives the maker of Jeep, Dodge and Chrysler (along with its multiple European brands – including Fiat, Peugeot, Vauxhall) a shot at a big recovery in 2026.
Aurora represents my highest/risk reward; this Small Cap climber has no rope or profits at this point. It is, however, the leader in a nascent but surely obvious future: they are the only company running a commercial, driverless trucking service on public roads in the USA. Never mind Robotaxis in town, the benefits from hauling freight across country at night without a driver are much clearer and substantial if they succeed.
The Hikers (Medium Risk)
A group of well-prepared adventurers, the hikers take a more cautious approach, avoiding the trickier parts of the climb.
Team: Alcoa (AA), Old Dominion (ODFL), Nike (NKE)
Alcoa: the venerable US aluminium producer leads off my Hikers team. Supply is more favourable ahead, with China curtailing growth and demand from cars/planes to rise. Expect asset sales of decommissioned sites to act as extra levers to pull in addition to the demand for power pushing up prices: and what do you think goes into all those data centres?
Old Dominion Freight Line is picked for a rebound in 2026 after disruption in all consumer sectors this year has led to a large decline in the stock this year. The company is one of the big 5 less-than-truckload (LTL) carriers in the USA (behind Fedex) yet this group control less than 10% of the market with thousands of small operators. But now I expect a shortage of drivers, immigration clampdown and higher insurance costs will all put pressure on smaller rivals and be positive for Old Dominion along with the overdue turn in the cycle.
Nike, like Old Dominion, should gain from fiscal boosts to consumption from Trump’s tax giveaways plus lower rates from politically motivated Fed. That should make 2026 a surprisingly good year for consumer stocks in general. Aside from macro, Nike itself is back in business with a better product lineup in running shoes (even my daughter is back as a customer!) and a USA based World Cup to boost that segment.
The Pathfinder (Lowest Risk)
Taking the easiest and slowest route around the mountain, avoiding most of the tough obstacles is the Pathfinder. Slow and steady is the target here.
Team: Alphabet (GOOG), A J Gallagher (AJG), Pfizer (PFE)
Google, yes. I consider Google to be a low-risk stock. Having fought off a challenge to dismantle them, the company is now reestablishing itself as the world’s leading company yet is cheaper than almost all its behemoth peer group. The clearest, most sure winner from the continued adoption of new generation computing (the word ‘intelligence’ is misused), I am supremely confident they will outperform the market and should end the year larger than Nvidia.
AJ Gallagher is an insurance broker looking for a better year after a dismal 2025. Property & Casualty is facing weak pricing which has crimped earnings – but I think we know this after a 30% decline since June. I believe the market is making a mistake over AI and its negative implications here. While it may hurt certain ‘agents’, insurance is a relationship business, plus each risk is different; not easily replaced by machines which are better suited to repetitive tasks.
Pfizer has lacked growth since their Covid vaccine 4 years ago and after giving a flat, reduced sales forecast for next year, they are historically cheap at under 10x earnings with almost a 7% dividend yield. On that basis, I have a margin of safety while we wait to find out if their pipeline pays off; the company has announced plans to advance 15 clinical trials in 2026.
For more background on our U.S. market views, visit the Over the Pond archive.
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