We recently published a list of the 11 Best Performing Stocks So Far In 2025. In this article, we are going to take a look at where Root, Inc. (NASDAQ:ROOT) stands against the other best performing stocks so far in 2025.
On March 21, Jason Pride, Chief of Investment Strategy at Glenmede, and Stephen DeNichilo, Portfolio Manager at Federated Hermes, appeared on CNBC’s ‘Power Lunch’ to discuss the current market dynamics. Pride cautioned against overemphasizing the MAG7 tech stocks and noted that this market is one of the most concentrated in history, which is similar to the levels seen in 1999–2000 and the Roaring Twenties. He argued that this extreme concentration suggests that future market performance is more likely to come from areas outside these dominant stocks. Pride emphasized the importance of diversification in this environment. He advised investors to focus on the remaining stocks in the S&P 500 index beyond the MAG7. He highlighted small-cap stocks, international equities, and bonds as better opportunities for future returns. According to him, moving away from over-concentrated segments of the market is essential for achieving better long-term performance.
DeNichilo added his perspective by explaining what drives stock prices over time. He noted that for a stock to rise in value, someone must be willing to buy it at a higher price. With the MAG7 being some of the most widely owned stocks in history, he questioned who else is left to buy them. He pointed out that markets dislike uncertainty, and today’s environment is filled with it, ranging from tariffs and inflation to interest rate policies and unpredictable forecasts from big companies. This lack of clarity has created a self-imposed economic slowdown. DeNichilo shifted focus to small-cap stocks, which he described as significantly undervalued based on historical metrics. He suggested that if interest rates decline and market confidence improves over the next 6 to 12 months, small-cap stocks are likely to perform well. He argued that smaller companies often drive innovation due to their agility and ability to grow earnings faster than massive corporations like those in the MAG7.
Our Methodology
We used the Finviz stock screener to compile a list of all the best-performing stocks. We then picked the 11 stocks with the highest year-to-date gains, as of March 21. The stocks are ranked in ascending order of their year-to-date performance. We have also added the hedge fund sentiment for each stock which was sourced from Insider Monkey’s database.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
An experienced insurance agent explaining the benefits of an insurance product to a customer.
Root, Inc. (NASDAQ:ROOT)
Year-to-Date Performance as of March 21: 110.28%
Number of Hedge Fund Holders: 16
Root, Inc. (NASDAQ:ROOT) provides automobile and renters insurance products directly to consumers in the US. Using a mobile-first and online approach, it streamlines insurance services through its app and website. This is supplemented by digital media, agents, and referral partnerships.
The company’s DTC auto insurance is driven by advanced technology. In 2024, the company grew its customer base by 21%, bringing its total number of active insurance policies to over 414,000. The company also demonstrated effective risk management and paid out less in claims than expected. Specifically, it has a gross loss ratio of 59% and a gross combined ratio of 95%.
2024 marked the company’s first full year of net income profitability. It achieved $31 million in GAAP net income. In Q4 2024 alone, the net income was $22 million. Root, Inc. (NASDAQ:ROOT) is reducing rates in select states due to its strong loss ratio. It’s also expanding its market reach, and now covers 76% of the US population. The company is investing in data-rich marketing and technology to fuel continued growth with a focus on long-term profitability over short-term gains.
Overall, ROOT ranks 7th on our list of the best performing stocks so far in 2025. While we acknowledge the growth potential of ROOT, our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than ROOT but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
