3 Reasons I Expect My Stocks to Gain 40% or More by Year-End

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“He who lives by the crystal ball will eat shattered glass.”

That’s an old Wall Street saying that Ray Dalio, founder of hedge fund giant Bridgewater Associates, likes to repeat.

And after the way 2026 has unfolded, I think we can all appreciate it.

Think back to the beginning of the year. If someone had told you that…

• Crude oil prices would surge above $100 per barrel, or
• Gold prices would drop about 20% from all-time highs, or
• Global central banks would raise key interest rates, or
• Treasury yields would jump to more than 5% …

Would you have believed them? Probably not.

Yet here we are. And despite all those unexpected developments, the stock market has remained remarkably resilient.

Of course, I don’t have a crystal ball, either. That’s why I prefer to let the data do the talking.

Consider what happened in September.

September, historically the worst month of the year for stocks, brought plenty of volatility. But the S&P 500 ultimately finished the month down just 0.5%, while the tech-heavy NASDAQ actually gained 1.9%.

And on Tuesday, October 6, both indexes closed at new all-time highs.

Now we’ve entered what has historically been the strongest quarter of the year for stocks.

In fact, the S&P 500 has rallied in the fourth quarter 34 of the past 41 years, with an average gain of 4.4%.

Of course, I wouldn’t recommend investing based on seasonal patterns alone. But the historical trend isn’t the only reason I’m optimistic. Right now, the fundamentals are pointing to a strong finish to 2026, especially when it comes to corporate earnings.

So, in today’s Market 360, I want to share three key reasons I believe stocks can continue to rally into year-end – and how you can position yourself to take advantage of the next leg higher.

Reason No. 1: Earnings Could Push Stocks Higher

The third-quarter earnings season is about to get underway, and I expect the results to give stocks another boost.

Our friends at FactSet currently estimate that the S&P 500 will post 29.5% average third-quarter earnings growth in the third quarter, up from 26.7% on June 30.

What’s interesting is that analysts have raised third-quarter earnings estimates by 1.4% over the past three months. That’s unusual, folks. Over the past five years, analysts have typically lowered estimates by an average of 2.2% during a quarter.

And corporate America is feeling pretty confident, too. A record 72 S&P 500 companies have issued positive earnings guidance for the third quarter.

Remember what positive earnings surprises did for stocks during the second-quarter earnings season?

From mid-July, when earnings season started, through NVIDIA Corporation’s (NVDA) earnings report in late August, the S&P 500 soared 3.7%. Wave after wave of positive earnings surprises helped push stocks higher.

I suspect we’ll see more of the same in October and November.

Reason No. 2: Midterm Uncertainty Is Fading

The upcoming midterm elections have been a major distraction for Wall Street this year.

That’s not unusual. Elections naturally create uncertainty around taxes, regulations, government spending and other policies – and Wall Street doesn’t like uncertainty.

But fortunately, that uncertainty has an expiration date.

In fact, the broader market tends to strengthen as midterm-election uncertainty begins to clear. Since 1970, stocks have historically begun rallying about 22 trading days before Election Day, as investors get a clearer picture of the likely outcome.

Which means, we’re about to enter that window.

That’s another reason I’m optimistic about the final months of 2026. That same research found an average 14.1% return in the six months after midterms since 1970.

So, once the elections are behind us, one of Wall Street’s biggest distractions will be gone. Investors can get back to focusing on the strong fundamentals supporting this market.

Reason No. 3: Holiday Spending Could Boost Growth

Once the midterm elections are behind us, everybody can turn their attention to the holidays. And the holidays are a happy time of year.

That should be good news for the U.S. economy, too, because the latest retail sales report shows the U.S. consumer is alive and well.

Retail sales increased 1.2% in August, well above estimates of a 0.8% rise. And 12 of the 13 categories surveyed grew in August. Not surprisingly, gas station sales rose the most, up 3.1%, as pump prices rose.

Sales at bars and restaurants also rose 1.2% in August. So, even with higher gasoline and food costs, folks were still getting out and about.

And that spending should pick up even more as the holiday shopping season gets underway. Deloitte currently expects holiday retail sales to reach between $1.7 trillion and $1.71 trillion this year, up 4% to 4.8% from a year ago. Online sales are expected to be even stronger, rising between 7.5% and 8.4%.

Since consumer spending remains strong, once the election is over and the holidays arrive, I expect consumers to keep opening their wallets. That should provide another nice boost to economic growth through the end of the year.

So, it looks like my prediction for 5% annual GDP growth this year may finally come true.

How to Position for the Next Leg Higher

Add it all up, and I believe these three reasons could set the stock market up for a stunning finish to 2026.

But here’s the important thing to remember: Even if the broader market rallies, some stocks will perform much better than others.

And that’s where the fundamentally superior stocks I follow in Growth Investor come in.

The current Growth Investor Buy List is already up 28% year-to-date – more than double the S&P 500’s 13% rise.

In fact, 2026 is shaping up to be one of Growth Investor’s best-performing years in decades. And I don’t think the run is over yet.

I believe these stocks have the potential to gain another 40% by year-end.

Even after this impressive performance, I still expect these stocks to gain at least another 40% by the end of the year.

The reason is simple: They remain backed by superior fundamentals.

On average, these companies have 107.9% annual earnings growth and 61.6% annual sales growth. Better still, their earnings estimates have been revised 19% higher over the past three months.

In other words, these companies aren’t moving higher on hype. Their businesses are growing, Wall Street is raising its expectations and another wave of quarterly earnings results is right around the corner.

And I expect those strong fundamentals to help separate the biggest winners from the rest of the market in the months ahead.

That’s exactly the kind of environment my Growth Investor service was designed to take advantage of. I use it to zero in on companies with strong sales and earnings growth, positive earnings momentum and persistent institutional buying pressure.

And with the AI boom entering its next phase, I believe we’re approaching another exciting opportunity to put that strategy to work.

That’s why I recently put together a special presentation explaining what I see coming next, which companies could benefit and how you can position yourself to take advantage.

Click here to watch it now.

Sincerely,

Louis Navellier

Editor, Market 360

The Editor hereby discloses that as of the date of this email, the Editor, directly or indirectly, owns the following securities that are the subject of the commentary, analysis, opinions, advice, or recommendations in, or which are otherwise mentioned in, the essay set forth below:

NVIDIA Corporation (NVDA)