By Steve Dinnen
The stock market did well in 2025. Your portfolio probably profited handsomely. Will 2026 be as rewarding? Can the market pull off another year of double-digit gains?
Just by looking at the S&P 500 Index, Stephen Auth, chief investment officer for equities at Federated Hermes, is forecasting a flat 2026. Speaking to Bloomberg, he figured the S&P 500 will reach about 7,000 by year’s end — up from 6,845 at the end of 2025. He foresees a target for the index of 8,600 at the end 2027, a healthy 25.6% rise over that period.
Auth cited several factors behind his reasoning, all of which will certainly impact the market in 2026:
AI-driven productivity gains: The integration of artificial intelligence will lead to significant productivity improvements across various sectors, fueling economic and earnings growth.
A favorable macroeconomic environment: He expects GDP to grow at least 5%.
Federal Reserve policy: Auth anticipates the Fed will continue its easing cycle, with interest rate cuts providing a “rocket booster” to sectors that have been in recession.
Corporate earnings expansion: He expects profit margins to continue expanding due to AI investments and the shifting economy.
Market multiple expansion: The market multiple is expected to rise, reflecting the shift toward a more tech-oriented index mix.
In West Des Moines, Kent Kramer, chief investment officer at Foster Group, admits to lacking a crystal ball that could guide the wealth management firm’s $5 billion investment portfolio. But he and communications director Gretchen Muller saw some themes in 2025 that are continuing into 2026.
AI is first and foremost. Its development and implementation led to powerful performance by several big players in that space, including Palantir (up 239%), Micron (up 135%), as well as Nvidia, Meta Platforms, Microsoft and Amazon.
There has been much talk of an AI bubble. Kramer reminisced about the dot-com bubble of the late 1990s. It, too, was transformative, and fortunes were made and lost.
Away from AI, Kramer said there may be opportunities in real estate. He didn’t name names.
But Kelly Flynn did. “I am an owner of Principal Financial Group Inc. and remain excited about its future,” said Flynn, founder and chief investment officer of Prospective Value Partners in Des Moines. He sees a competitive advantage in the synergy between Principal’s retirement service businesses and its asset management business.
CEO Deanna Strable is smart and ambitious and is off to a strong start. The steepening yield curve helps the business in a variety of ways. It currently trades at just 10 times earnings, a substantial discount to the overall market.
Maybe 2026 is Principal’s breakout year.
Among Iowa companies, Casey’s is now king of the hill
For decades Principal Financial Group Inc. has stood tall as the most valued of Iowa public companies. Thanks to a spectacular share price runup in 2025 for Casey’s General Stores Inc., the Ankeny convenience store operator now holds the pole position.
At the end of 2025, the market capitalization (share price, times the number of shares) of Casey’s (CASY) was $20.78 billion, slightly higher than Principal’s (PFG) valuation of $19.94 billion. Principal had a solid 2025; its shares rose 18.4%. Shares of Casey’s, which is expanding east into Ohio and Michigan (where there are hundreds of small towns that it favors), shot up 40%. Since January 2023, the share price of Principal has remained flat. Casey’s, meanwhile, has climbed 152%, which is how Casey’s got to be No. 1 in Iowa.
Iowa’s third-place company, by market cap, is Ames-based Workiva, valued a $4.66 billion at the end of 2025. Fourth place belonged to F&G Annuities and Life Inc. of Des Moines, at $4.04 billion. And fifth place is Muscatine-based HNI Corp., at $3.04 billion. Its fortunes could rise as it blends in the acquisition of fellow furniture maker Steelcase Inc.
