By Teresa Rivas

The stock market keeps rising and there are still ways to put money to work, even as the S&P 500 bumps up against record highs.

In theory, there are plenty of reasons to be cautious about stocks, including the escalation of hostilities in the Middle East over the weekend. Yet the market has shrugged off many of these worries -- and there are plenty of ways to play that optimism.

"The gap between what we (and investors and clients) are reading daily in the mainstream and financial media is wide and getting wider," notes Sevens Report President Tom Essaye, citing the disconnect between "scary headlines" dominating the news cycle and markets' ongoing rally.

Yet it is just as easy to understand why the market has been resilient. There have been almost no hard data indicating an imminent recession, bond markets aren't signaling too much concern about the deficit, and the TACO trade -- which assumes tariffs are all bark and little to no bite -- is still working.

Of course, all of that could change. Yet for now, it seems like the bulls remain in charge.

Trivariate Research Founder Adam Parker notes the market's risk-reward looks fairly balanced at present, but does see some points helping the longer-term momentum stay in place, from the benefits of billions invested in artificial intelligence to the strong position of large U.S. companies.

"The post-COVID inflation era did not cause a decline in these companies' gross margins, and the top 50 companies represent nearly 50% of the gross profit dollars of the S&P 500," he writes. "Hence, the S&P 500 valuation is likely to remain relatively elevated."

There are a few ways to play offense, one of which is to keep buying the post-"Liberation Day" winners. His research shows construction and engineering, electrical equipment, semiconductors, and airlines are among the best-performing sectors since the April 8 low point. Likewise, Oklo, e.l.f. Beauty, Nebius Group, Five Below, Hims & Hers Health, and Robinhood Markets have been some of the best individual performers, doubling or more since that date.

Another option is to look to history as a guide. Parker examined the last 15 times the S&P 500 went up 10% or more in a six-month period and found that transportation infrastructure, building products, internet, semiconductors, and hardware were among the industries that did the best. Within these sectors, Intuit, Uber Technologies, Applied Materials, AppLovin, and CrowdStrike Holdings are among stocks in the top 30% of upward analyst revisions and in the top 30% of price momentum.

Parker suggests focusing on gross margins as well. As the impact of tariffs begin to make themselves felt in the second half of the year and beyond "profit margins will likely be a crucial differentiating factor in stock performance in the second half of this year," he writes.

Trivariate analyzed the consensus sell-side gross margin forecasts and lists stocks with the highest gross margin growth expectations. RTX, Uber, and Micron Technology top that list, while also performing well since April 8.

Finally, investors can try a Goldilocks approach, or as Parker puts it, stocks where things "are going well but not too well." These companies are in the top half in terms of price momentum over the past year, expensive but not overly so, and forecast to have revenue growth near but not at the top of the curve and with a market capitalization of more than $50 billion. Microsoft, Google parent Alphabet, Facebook parent Meta Platforms, Netflix, Oracle, and Philip Morris make the cut.

Investors might not have to wait long to see if offense or defense is called for.

Silvercrest Asset Management Chief Investment Strategist Robert Teeter writes that "July will be essential for setting the course of the second half of 2025, as three market hobgoblins will be largely determined: The final tariff landscape, tariff-induced inflation, and new tax-and-spending policy."

Yet he, too, is more optimistic than not. "The likely result in the second half of 2025: Renewed domestic economic activity and further advances in profit margins."

In other words, it's summertime, and the living (should be) easy.

Write to Teresa Rivas at teresa.rivas@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

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June 16, 2025 15:25 ET (19:25 GMT)

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