In this article, we will take a look at the 10 stocks set to explode in 2025.
“Big Technology are The New Defensives” Strategist Says
As the Magnificent Seven continues to release earnings for the fiscal third quarter of 2024, investors are keen to see if the group can maintain their market leading position and exemplary performance. On October 25, Nancy Tengler, Laffer Tengler Investments CEO & Chief Investment Officer, appeared in an interview on Yahoo Finance to share her market thesis on big tech amid current market conditions.
Tengler suggests that names in big technology boast reliable earnings growth, fitting the basic criteria of such. She adds that she would much rather own big tech names than invest in traditional defensive stocks despite a sluggish economic backdrop. Tengler reiterates her bullish stance on the sector claiming that big technology names are the new defensive and hold much stronger positions in the market.
READ ALSO 10 Oversold Tech Stocks To Buy Right Now and 8 Unstoppable Stocks That Could Make You Richer.
She emphasized that these names have large cash flow reserves, oftentimes, bigger than most countries. Tengler highlights that she is not bullish on all of the names in the magnificent seven and stresses that she has expanded her exposure to the tech sector, adding new stocks to her portfolio. However, at the same time, there are several names within the magnificent seven that cannot be ignored or argued against. She also suggests that investors must seek to invest and own a select few among the group, instead of owning all of them.
She shares that she was previously pessimistic about certain names she held and emphasized that she will focus on margins for certain stocks among the Mag Seven moving forward. Tengler also adds that while these companies have been criticized for pouring billions into capital expenditures, certain names are expected to benefit immensely from AI monetization and their unique cloud services and products.
While many characteristics define exploding stocks, some key traits involve an expanding customer base, improving monetization of offerings, increasing cash flows, and strong fundamentals. Biotech, electric vehicles, artificial intelligence, and cloud are among the few high-growth markets expected to blow up in the coming years. Within these sectors, certain names have been performing exceptionally well in the current market rally and are expected to outperform in 2025. That said, let’s take a look at the 10 stocks set to explode in 2025.
25 Technologies That Have Changed the World
Our Methodology
To come up with 10 stocks set to explode in 2025, we consulted financial media to shortlist stocks that are expected to perform exceptionally well according to analysts and strategists. After consulting 10 similar rankings on the internet we examined the Street-High upside for each stock and picked the ones with the highest upside, as of October 27, 2024. Our list is in ascending order of the street high upside as of October 27, 2024. We have also mentioned the hedge fund sentiment for each stock.
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 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
10 Stocks Set to Explode in 2025
10. Uber Technologies, Inc. (NYSE:UBER)
Street High Upside as of October 27, 2024: 47%
Number of Hedge Fund Holders: 145
Ride-hailing company Uber Technologies, Inc. (NYSE:UBER) is one of the stocks set to explode in 2025. The ride-hailing company is expected to become a completely electric and zero-emission platform by 2040, a major reason for its growing fanbase across the globe.
In Q2 2024, Uber (NYSE:UBER) grew its gross bookings by 21% year-over-year and reported a 14% increase in audience. Last year the company partnered with Waymo to bring autonomous driving technology to UBER. Additionally, to strengthen its position on autonomous driving, the company extended its partnership with Waymo to offer ride-hailing services to Atlanta and Austin by early 2025.
More recently, on October 3, Uber (NYSE:UBER) formed a partnership with ENSO, The Earthshot Prize Finalist, to launch a range of low-emission electric vehicle tires across the United Kingdom and the United States. At the moment, London is Uber’s capital of electrification given that 30% of Uber’s miles in the city are fully electric. Additionally, the company developed a Clean Air Fund worth £145 million to help drivers go electric. As for the finalist, ENSO is developing its carbon-neutral tire factory in the United States, which is expected to be operational by 2027 and will be able to produce over 5 million EV tires every year.
Despite the uncertainty in the autonomous driving industry, Uber Technologies, Inc. (NYSE:UBER) is expected to benefit tremendously from the AI wave, contributing to our list ranking. Analysts are also bullish on the stock, and their 1-year high price target of $114 points to a 47% upside from current levels.
RiverPark Advisors stated the following regarding Uber Technologies, Inc. (NYSE:UBER) in its first quarter 2024 investor letter:
“Uber Technologies, Inc. (NYSE:UBER): UBER was a top contributor in the quarter following better than expected 4Q23 earnings and 1Q24 guidance. Gross bookings of $37.6 billion were up 22% year over year. Mobility gross bookings of $19.3 billion grew 29% over last year driven by a combination of product innovation and driver availability. Delivery gross bookings of $17 billion were up 19% from last year and continued to be strong throughout the quarter. 4Q Adjusted EBITDA of $1.3 billion, up $618 million year over year, was better than management’s guidance of $1.2 billion, and the company generated $768 million of free cash flow, up from a cash loss of $303 million last year. Management guided to continuing growth in 1Q Gross Bookings (20% growth) and Adjusted EBITDA (of $1.3 billion). The company hosted a well-received analyst day in February during which it guided to three year compounded annual growth rates for gross bookings of mid-to-high single digits and EBITDA of 30-40%, both above investor expectations. The company also guided to free cash flow conversion of 90% of EBITDA.
UBER remains the undisputed global leader in ride sharing, with a greater than 50% share in every major region in which it operates. The company is also a leader in food delivery, where it is number one or two in the more than 25 countries in which it operates. Moreover, after a history of losses, the company is now profitable, delivering expanding margins and substantial free cash flow. We view UBER as more than a ride sharing and food delivery service; we also see it as a global mobility platform with 142 million users (by comparison, Amazon Prime has 200 million members) and the ability to penetrate new markets of on-demand services, such as package and grocery delivery, travel, and hourly worker staffing. Given its $5.4 billion of unrestricted cash and $4.8 billion of investments, the company today has an enterprise value of $165 billion, indicating that UBER trades at 21x our estimates of next year’s free cash flow.”
9. Tesla, Inc. (NASDAQ:TSLA)
Street High Upside as of October 27, 2024: 49%
Number of Hedge Fund Holders: 85
Tesla, Inc. (NASDAQ:TSLA) is an automotive and clean energy company specializing in producing electric cars and solar-integrated renewable energy solutions. The company is one of the largest EV manufacturers in the United States.
In the third quarter of 2024, Tesla, Inc. (NASDAQ:TSLA) logged revenue worth $25.18 billion, up by 8% year-over-year. Automotive revenues accounted for most of the revenue, at $20.02 billion. While automotive revenues only grew by 2% year-over-year, its energy segment grew by a staggering 52%, logging $2.34 billion in sales. Overall, revenue was driven by increasing vehicle deliveries and rapid growth in its energy segment.
Previously, Tesla, Inc. (NASDAQ:TSLA) launched a new lineup of electric vehicles, to boost the launch of new models. Its new lineup and extensive production line will deliver over 3 million vehicles of capacity when optimized fully. In addition to that, the company produced its 7-millionth vehicle on October 22nd, 2024, a day before the Q3 earnings release date.
Despite sluggish growth in its electric vehicle segment, the company’s investments in AI make autonomous driving a reality, contributing to its position on our list. Tesla is poised for significant growth in the coming years because of its growing emphasis on AI and its stance on sustainability.
Baron Funds mentioned Tesla, Inc. (NASDAQ:TSLA) in its Q2 2024 investor letter:
“As discussed in the Fund’s prior shareholder letter, the fears about Tesla’s products were misplaced. Instead of the company being exclusively dependent on limited vehicle models and software advancement, the company announced it will more rapidly introduce products that appeal to a wider audience. It also demonstrated that its price reductions were the result of efficiencies rather than only to spur demand. Margins exceeded expectations. And the company’s integration of its hardware with proprietary AI software should facilitate full self-driving capabilities and subsequent new revenue streams. This integration of hardware with software creates a dynamic growth company as it more fully explores its potential with Optimus, humanoid robotics. The combination of these catalysts resulted in Tesla’s stock increasing meaningfully and rapidly in the second half of the quarter. This stock price momentum has continued into the next period.”