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The old market adage says, "Sell in May and go away," but this year is proving to be anything but typical. Instead of retreating, the market surged in May, with the S&P 500 posting a gain of over 6% for the month. Perhaps the saying should be updated to "Buy in May and don't go away." |
This powerful rally did more than just boost portfolio values. It significantly improved market sentiment. Just a few weeks ago, we were navigating a heightened volatility environment, with fear gauges plummeting toward pandemic levels, and the volatility index (CBOE: VIX) surging to unprecedented heights. But in a matter of weeks, the market staged an impressive V-shaped recovery, with major indices turning green on the year and reclaiming key technical levels across the board. |
Now, as we move into June and the start of summer, the question becomes: Has May set the tone for a strong summer rally and significant upward momentum? And if so, which stocks are best positioned to benefit? |
In May, several themes began to emerge that could define the leaders of this summer, from a resurgence in power generation and nuclear energy stocks to several undervalued Magnificent Seven names regaining favor. Hard-hit Mag 7 stocks, such as Tesla and Alphabet, have regained a bid, with a renewed focus on AI and autonomous technologies. Meanwhile, several mid-cap stocks are outperforming in sectors such as aerospace and insurance. |
In an environment where leadership is shifting and volatility is calming, identifying stocks in strong sectors with growth potential and relative strength can provide a significant edge. |
Here are five stocks that could be poised to soar this summer. |
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1. MercadoLibre: Latin America's Tech Powerhouse |
MercadoLibre (NASDAQ: MELI) is a leading e-commerce and fintech company in Latin America. While it began as an e-commerce marketplace, MercadoLibre now covers logistics, payments, and consumer credit in the region. It's not just a retailer; it's building a digital infrastructure for an entire region. |
In May, the company reached a significant milestone by entering Kantar's list of the 50 most valuable global brands, ranking No. 50. This international recognition aligns with, displays, and cements MercadoLibre's strong execution and growth across multiple business lines. |
The company's Q1 2025 results only reinforced its momentum. MELI reported earnings of $9.74 per share, beating expectations by nearly 18%. Revenue jumped 37% year-over-year to $5.93 billion, far ahead of the $5.52 billion consensus estimate. |
From a technical standpoint, MELI has been nothing short of impressive. The stock is up over 50% year-to-date and is now consolidating above prior resistance around $2,400. |
Currently trading between $2,500 and $2,600, MELI looks primed for a potential breakout above $2,600. A decisive move through that level could trigger the next leg higher, potentially making it one of the top performers this summer. |
2. Rocket Lab USA: A Space Play With Imminent Catalysts |
Rocket Lab (NASDAQ: RKLB) is not just another space company. It's one of the few publicly traded corporations offering complete end-to-end space services, from rocket launches to satellite manufacturing. Its Electron rocket has become a go-to option for small satellite deployment, with 63 successful launches under its belt as of April. |
While Rocket Lab's most recent earnings may have disappointed some investors, the stock demonstrated remarkable strength during the market sell-off earlier this spring, remaining above its 200-day simple moving average (SMA). |
That resilience translated into an almost 20% rally in May, pushing the stock close to its all-time highs. |
The real buzz around RKLB centers on its next-generation rocket: Neutron. Slated for its maiden flight in the second half of 2025, Neutron is a reusable, medium-lift vehicle designed to compete directly with SpaceX for large-scale satellite constellation missions and beyond. |
As the Neutron launch approaches, anticipation and speculation are likely to build significantly. If retail and institutional investor optimism continues to ramp up around this transformative catalyst, RKLB could ride that wave of momentum well into the summer and beyond. |
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3. Root Inc.: A Disruptive Force in Insurance |
Root (NASDAQ: ROOT) is turning heads in an industry not typically known for innovation, insurance. Through its app-based model, Root leverages real-time driving data collected during a test drive period to tailor insurance quotes. This approach allows the company to assess risk more accurately while maintaining a lean, direct-to-consumer model that challenges legacy insurers. |
After years of development and execution, Root has finally turned the corner on profitability in recent quarters. That inflection point has not gone unnoticed. Over the past year, ROOT is up 136%, including an 80% surge in 2025 alone. |
The company's Q1 2025 results helped solidify its breakout moment. ROOT posted earnings per share of $1.07, crushing the $0.45 estimate, and generated revenue of $349.4 million, beating forecasts by over $44 million. |
Technically, the stock now faces a key breakout level near $140. If ROOT can reclaim and hold that zone, it could trigger another wave of buying interest as investors and traders look for the next leg higher. With a market cap now above $2 billion, Root's growth story appears to be gaining traction, and that momentum could carry the stock much higher this summer. |
4. NuScale Power: Riding the Nuclear Revival |
Nuclear power is back in the spotlight, and NuScale Power (NYSE: SMR) is at the forefront of that resurgence. Recent executive orders from the Trump administration have streamlined regulations and prioritized advanced nuclear technology as crucial to U.S. national security, particularly in the context of energy needs for AI infrastructure and military operations. |
NuScale's focus on Small Modular Reactors (SMRs) positions it perfectly for this shift. These compact, scalable nuclear reactors offer cleaner energy with reduced costs and faster deployment, precisely what the energy grid of the future needs. |
SMR stock has already seen massive gains, up 78% year-to-date, and just notched a new all-time high in May. But even after this move, the story might just be getting started. |
A potential entry point could emerge if the stock stabilizes around $30, a prior resistance level now turned support. If it holds and forms a higher low in that zone, and within its higher-timeframe uptrend, traders could be looking at a textbook higher-low setup for continuation higher. With both government support and sector momentum behind it, SMR could be a momentum star this summer. |
5. Tesla: The Robotaxi Revolution Begins |
Tesla (NASDAQ: TSLA) has had a tumultuous start to the year, but recent developments suggest a turnaround may be underway. The stock is up 23% over the past month, as Elon leaves his government role and returns to Tesla full-time, and has reclaimed its key moving averages, including the all-important 200-day Simple Moving Average (SMA). |
Why the renewed strength and significant optimism? A major catalyst is just around the corner: Tesla's robotaxi service, set to debut in Austin, Texas, on June 12, 2025. This pilot program will feature a fleet of autonomous Model Ys, eventually transitioning to Tesla's sleek new Cybercab: an autonomous, two-passenger vehicle with no steering wheel or pedals. |
The rollout will begin as an invite-only event within a geofenced area for safety, but expansion to California and other markets is planned for the end of the year. Tesla hopes to scale production of the Cybercab to 2 million units annually by 2026, with a target price under $30,000. If successful, this initiative could disrupt the entire ride-hailing industry. |
Technically, Tesla is now holding firmly above the near-term support of $330. If it can stay above that level, and the robotaxi launch goes smoothly, the momentum could drive TSLA to reclaim its February breakdown level near $400, setting the stage for a big summer rally. |
The Stage Might Be Set for a Strong Summer Run |
Following a powerful May rally, the market is regaining its footing and may even be setting the stage for a strong summer run. One of the keys to capturing upside in this environment is identifying stocks with relative strength, major upcoming catalysts, or ties to fast-moving macro themes. |
Whether it's MercadoLibre's dominance in Latin America, Rocket Lab's Neutron launch, Root's profitability inflection and momentum, NuScale's role in the nuclear renaissance, or Tesla's autonomous ambitions, each of these five stocks has a unique storyline and technical setup that makes them compelling summer watchlist candidates. |
The season ahead may not follow historical norms, but in this market, that's precisely where the opportunity lies. |
Written by Ryan Hasson |
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