Stock Market Naughty and Nice List from Motley Fool Money

In this engaging podcast, Motley Fool contributors Travis Hoium, Lou Whiteman, and Rachel Warren discuss:

• Top-performing stocks on their Nice List.
• Underperforming stocks on their Naughty List.
• Attractive discount stocks found on their shopping list.

To enjoy full episodes of all The Motley Fool’s complimentary podcasts, visit our podcast center. When you’re ready to invest, explore this curated top 10 list of stocks to consider purchasing.

A detailed transcript follows below.

This podcast was recorded on December 24, 2025.

Travis Hoium: Which stocks have made our naughty and nice lists in 2025? Tune in as Motley Fool Money begins now. Welcome back to Motley Fool Money. I’m Travis Hoium, joined today by Lou Whiteman and Rachel Warren. With Santa making his rounds early this year, we thought it would be entertaining to discuss some stocks that have made our nice list as well as those on our naughty list. Lou, let’s kick things off with the stocks on your nice list for 2025.

Lou Whiteman: It’s a bit tedious to keep talking about the MAG 7, but I have to mention them again. Topping my nice list is Alphabet. I can’t help it; they continue to impress.

Travis Hoium: Who would have anticipated that at the start of the year?

Lou Whiteman: Exactly! The prevailing narrative entering 2025 was that they had fallen onto the naughty list. There were numerous concerns regarding OpenAI and other AI advancements potentially destroying their search business. How did that narrative unfold? The results speak for themselves. Alphabet’s stock has surged nearly 70%, marking the highest returns among the MAG 7. They dominate the sectors of autonomy and streaming, no offense to Netflix, and their Gemini platform is emerging as a major player. While not all search-related issues are resolved, there are compelling arguments regarding the future of this business that shareholders must find reassuring.

Travis Hoium: What other stocks do you have in mind? In the AI sector, Nvidia must be on your radar as well; they’ve had an impressive year after being on a remarkable ascent. They are now almost regarded as a value stock.

Lou Whiteman: Santa isn’t going to chastise anyone for doing what was expected of them. Sometimes, simply meeting expectations is all that is asked. Nvidia didn’t surprise anyone; they didn’t have a turnaround story, but they delivered exactly what investors anticipated, and that’s commendable. There are also some speculative opportunities if you’d like to explore those, but I prefer not to focus solely on the MAG 7.

Travis Hoium: Which executives are making your nice list? We’ve discussed several stocks, but there are some intriguing leaders this year.

Lou Whiteman: I want to highlight one of my favorite CEOs, Sir Peter Beck, the driving force behind Rocket Lab. Rocket Lab has had a remarkable year, doubling its value in 2025. I initially invested in this company due to their engineering-focused mindset, which allows them to maintain a distance from the distractions of public markets. Although a publicly traded CEO must be attentive, Beck has not let investor enthusiasm alter his long-term goals. He remains committed to building the company he envisions, and I believe many positive developments are yet to come from Rocket Lab.

Travis Hoium: Rachel, who stands out on your nice list this year?

Rachel Warren: I have several stocks on my nice list this year, but a few notable names are MercadoLibre, the leading e-commerce and fintech powerhouse in Latin America. This region is still significantly underserved in terms of digital commerce and financial services compared to other areas. MercadoLibre boasts an exceptional growth trajectory, with 27 consecutive quarters of 30% or more year-over-year revenue growth. They are expanding their logistics network and leveraging AI technology to drive operational efficiencies, making them a fantastic and well-managed company. Shifting gears, in the retail sector, which has seen its fair share of challenges this year, TJX is another standout.

Travis Hoium: Many retailers have struggled this year.

Rachel Warren: Indeed, several retailers are on the naughty list. However, TJX Companies, the parent company of TJ Maxx and Marshall’s, has made it to the nice list. As an off-price retailer, they have maintained a resilient business model. Their strategic buying tactics have proven effective, and interestingly, the off-price treasure hunt shopping experience tends to thrive regardless of economic conditions. TJX has excelled in sourcing and managing inventory efficiently, making them a strong player in the retail space. Lastly, I want to mention Klarna, which is making waves in the buy-now-pay-later sector. This fintech company recently went public in the U.S. and is capturing significant market share through partnerships with major retailers like Walmart and eBay. Beyond traditional buy-now-pay-later offerings, Klarna operates as a digital bank in Europe, making it a fascinating company to watch as we head into the new year.

Travis Hoium: Do you believe that buy-now-pay-later services will become an integral part of the future of retail, or do you think this trend might fade away, leaving us to question the practicality of using such services for everyday purchases like groceries from Walmart?

Rachel Warren: I do not see it as a fad; I believe it is here to stay. Buy-now-pay-later services will be one of many tools available to consumers. There is certainly a broader conversation to be had about the financial wisdom of using these services, depending on what purchases they are applied to. However, they have proven to be a valuable resource for many consumers looking to spread out the financial burden of larger purchases. In challenging macroeconomic environments, we often see an increase in the utilization of these tools, suggesting that they are not going anywhere.

Travis Hoium: When we return, we’ll dive into the stocks on our naughty list. You’re listening to Motley Fool Money.

Welcome back to Motley Fool Money. We’ve reviewed the stocks on our nice list, but now it’s time to address the naughty list. Lou, which companies have fallen short in the stock market this year?

Lou Whiteman: We’ve checked our list twice, and first on the naughty list is the realm of Washington and the ongoing antitrust regulations.

Travis Hoium: Oh no.

Lou Whiteman: They’ve certainly been naughty, and as we explain to our kids, those who misbehave must face consequences. This year, they experienced high-profile setbacks in significant tech cases. Alphabet, I’m looking at you. Do you have any comments about their situation? Additionally, let’s consider the fate of some companies that were blocked from major acquisitions. This was intended to preserve competition. Take Spirit Airlines, for example. They were unable to complete their acquisition by JetBlue and ended up filing for Chapter 22 this year, which means two separate Chapter 11 filings. Well done, regulators. And then there’s iRobot. Remember when they attempted to sell to Amazon?

Travis Hoium: Yes, I recall that. They were seen as the future of robotics.

Lou Whiteman: Indeed, they were, but we can’t allow Amazon to acquire that data. Ultimately, they were liquidated to their Chinese vendor.

Travis Hoium: The intent was to protect data from Amazon, but now that data is in Chinese hands, so perhaps we don’t have a clear victory here.

Lou Whiteman: It has been a challenging year for them. Expect some coal in their stockings. Additionally, there are companies like Fiserv, ticker FI, which has plummeted 65% year to date. Travis, I still struggle to understand the payments landscape. I can’t identify the clear winners, but the market has decided that Fiserv’s Clover terminal isn’t going to emerge as the leading solution. Extra points go to them for making business decisions that attract congressional scrutiny. I also didn’t want to place The Trade Desk on this list, but I spoke with the big man personally about this. However, with a two-thirds decline in value this year, it qualifies for the naughty list. I still believe in the company, but they have significant work ahead to stay off that list in 2026.

Travis Hoium: Rachel, which companies are on your naughty list? Lou has set a high bar here; your response is under pressure.

Rachel Warren: It’s evident that many consumer goods stocks belong on this year’s naughty list. I had numerous options to consider, but I have chosen Target and Starbucks. Both companies’ stocks have experienced considerable drops this year. Target shares have fallen about 30% year to date, while Starbucks has seen a more modest decline in the single digits. The reasons behind these declines are multifaceted. High inflation has made consumers more price-conscious, resulting in reduced spending on non-essential items. This has significantly impacted Target, as approximately half of their sales stem from discretionary products. They have struggled to keep pace with competitors like Costco and Walmart. As for Starbucks, they specialize in expensive non-essential beverages, making them vulnerable in a challenging market.

Travis Hoium: Some may not view coffee as essential.

Lou Whiteman: Coffee is not a necessity.

Rachel Warren: While I wouldn’t suggest you make your coffee at home, it’s worth noting that both companies face unique challenges. It’s not solely macroeconomic factors at play. Target has witnessed declining in-store traffic for several quarters, compounded by customer backlash over their reversal of certain initiatives. They have also dealt with inventory management issues. On the other hand, Starbucks is navigating a lengthy turnaround under their new CEO, facing significant margin pressure and competition in core markets like China, their second-largest market after the U.S. Both companies are grappling with substantial issues and are losing market share. Can they stage a comeback in 2026? Personally, I would look more toward a potential turnaround in 2027. It’s safe to say that both companies are receiving some coal in their stockings this year.

Travis Hoium: When we return, we’ll explore holiday shopping. What are we planning to acquire? Stay tuned for that next. You’re listening to Motley Fool Money.

Welcome back to Motley Fool Money. As the holiday season wraps up, it’s time to shop for those items we truly desire but may not have found under the Christmas tree. Rachel, what investments are you eyeing as we head into 2026?

Rachel Warren: Healthcare is a significant focus area for me as a stock analyst at The Fool. Companies like Eli Lilly and Pfizer are on my radar, along with several retailers such as Walmart, Costco, and Lululemon, which I find undervalued and appealing in the retail landscape. I concur with Lou that Alphabet appears to be an enticing buy at this moment. As a long-time shareholder, I feel it’s vital to differentiate between truly undervalued stocks and value traps. When identifying a genuinely undervalued business, one must look beyond superficial low valuation metrics. Many undervalued stocks may be temporarily mispriced due to short-term challenges. In contrast, value traps are inexpensive for a reason. Seek companies with consistent revenue growth, stable profit margins, positive cash flow, and a sustainable competitive advantage that secures their market position. This distinction is crucial when evaluating potential investments.

Travis Hoium: Some of those like Walmart and Costco appear quite pricey. Does that concern you, especially if consumer spending begins to slow down? We haven’t experienced a true recession in a while, and it is possible that could happen in 2026.

Rachel Warren: I believe both companies possess durable competitive advantages for various reasons. For Walmart, around 60% of their revenue comes from grocery sales, which are considered non-discretionary expenses.

Travis Hoium: Less discretionary than coffee, for sure.

Rachel Warren: Absolutely. Costco, in particular, derives most of its profits from membership fees, a factor that has enabled them to thrive across diverse macroeconomic landscapes. I’m optimistic about both of these businesses as we enter the new year.

Travis Hoium: Lou, what investments are you considering?

Lou Whiteman: I’m glad to discuss stocks rather than my fascination with the Lego Saturn rocket, which looks incredibly cool. However, I’m focusing on two themes as we approach 2026. First, I continue to believe there are many opportunities in financials and REITs that have been overlooked while the spotlight has been on AI. With interest rates beginning to decline, this trend will likely benefit these sectors. While there are economic risks, especially for banks, this often leads to buying opportunities for high-quality companies at discounted prices. Secondly, if the economy falters, I plan to explore riskier or smaller stocks more closely. These investments may not yield immediate returns and could result in failures, but sectors like space and automation could present significant long-term growth opportunities. I’m inclined to invest in some of the stronger companies in these areas, understanding that some may ultimately fail while others could become substantial winners.

Travis Hoium: If a market pullback occurs, are you considering holding some cash to take advantage of potential discounts on stocks like Rocket Lab or Palantir? Many popular stocks have seen dramatic price increases, and if we enter a downturn, these stocks may experience significant declines, creating substantial opportunities. Is that your perspective on the market?

Lou Whiteman: I don’t typically keep cash on the sidelines. I categorize my assets as either cash or equities and invest money directly into equities. It’s challenging to time the market effectively. However, downturns are indeed the best times to buy if you’re a long-term investor, so if we experience a downturn this year, I’ll be keen to see what opportunities arise.

Travis Hoium: As always, the individuals featured on the program may hold interests in the stocks discussed, and The Motley Fool may have formal recommendations regarding those stocks. Therefore, do not make buy or sell decisions based solely on this discussion. All personal finance content adheres to The Motley Fool’s editorial standards and is not endorsed by advertisers. Advertisements are sponsored content provided for informational purposes only. To view our complete advertising disclosure, please refer to our show notes. For Lou Whiteman, Rachel Warren, Dan Boyd, and the team behind the scenes, I’m Travis Hoium. Thank you for tuning into Motley Fool Money. We look forward to seeing you on Friday.