In this article, we will discuss the 10 Stocks with Potential to Explode in 2025.
The recent pullback in US equities can be a sign of an aging bull market and a reaction to developments happening around trade policy, as per Jurrien Timmer, Director of Global Macro for Fidelity Management & Research Company. Corrections and volatility are the factors investors need to consider to capture any sort of long-term market returns. The current volatility has got many investors worried regarding the prospects of losing their gains.
Pullbacks Are Part and Parcel
As of March 11, the S&P 500 Index declined 9.3% from its all-time closing high it touched in mid-February, says Timmer. According to him, the market has seen a decline of 5% or more in 93% of calendar years since the year 1980, and it has suffered a 10% or more drop in 47% over the same calendar years. Yet, its average calendar-year return over a similar period has been ~13.3%. This means that pullbacks are quite common in the equity markets. The broader market has seen recovery from every one of those periods and has delivered healthy long-term returns.
READ ALSO: 7 Best Stocks to Buy For Long-Term and 8 Cheap Jim Cramer Stocks to Invest In.
Expert’s Views on Current Market Dynamics
Timmer opines that bull markets generally take place when there are expectations that the news can’t get any worse. The markets are forward-looking, meaning that stocks always showcase the expectations regarding the future. Even if the current news is not favorable, if investors think that tomorrow’s news will be less bad, the prices might start to increase. In this stage, the market continues to increase despite a decline in profits or earnings. This reflects that the higher P/E ratios have been fueling the market. After 2 – 4 quarters, the profits start to show up. Now, as the bull market matures, earnings growth tends to take charge, with the PE ratios beginning to decline.
As per Timmer, the market investors are in this environment. The earnings growth remains in the double digits, but since investors are getting into the later innings of the bull market, the P/E ratios have now been stretched. The broader market is slightly more prone to fluctuations or volatility. Apart from these trends, the market continues to process the impact of current trade policy shifts. Overall, Timmer said that across all different cycles, booms, crises, and busts, the markets eventually recovered and touched new all-time highs.
With this viewpoint, let us now have a look at the 10 Stocks with Potential to Explode in 2025.
Our Methodology
To list the 10 Stocks with Potential to Explode in 2025, we sifted through several online rankings to shortlist the stocks that analysts see significant upside to, as of March 18. Next, we mentioned hedge fund sentiment around each stock, as of Q4 2024. Finally, the stocks were arranged in ascending order of their hedge fund sentiment.
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).
10 Stocks with Potential to Explode in 2025
10. ORIX Corporation (NYSE:IX)
Average Upside Potential: ~510.7%
Number of Hedge Fund Holders: 7
ORIX Corporation (NYSE:IX) is engaged in providing diversified financial services. Analyst Natsumu Tsujino of Bank of America Securities maintained a “Hold” rating on the company’s stock. The rating is backed by a combination of factors highlighting the company’s current strategic direction and financial targets. As per the analyst, ORIX Corporation (NYSE:IX)’s strategic focus on business solutions and alternative investments offers both opportunities and challenges. The company continues to leverage its corporate finance customer base in a bid to enhance its business problem-solving services. Furthermore, the analyst believes that the company’s plans to improve its assets under management and invest in growth sectors as well as technology acquisitions remain promising, but the impact is yet to be seen.
Within the 3 categories, ORIX Corporation (NYSE:IX) expects stable “Finance” earnings to be aided by changes in the macro climate, a recovery in domestic businesses and asset management in Europe can support growth in “Operation,” while further promotion of capital recycling can fuel healthier profit margins in the “Investments” category. Notably, total revenues for the 9 months ended December 31, 2024 went up by 5% to ¥2,154,484 million versus ¥2,043,756 million during the same period of the previous fiscal year. This was mainly aided by higher operating lease revenues and services income, partially offset by lower finance revenues.
9. Diversified Energy Company PLC (NYSE:DEC)
Average Upside Potential: ~108.2%
Number of Hedge Fund Holders: 11
Diversified Energy Company PLC (NYSE:DEC) operates as an independent owner and operator of producing natural gas and oil wells. The company’s unique operational framework, strategic development partnerships, and growing adjacent business segments are expected to fuel long-term growth. Through completing more than $4.0 billion of acquisitions since its public listing in 2017, Diversified Energy Company PLC (NYSE:DEC) built a large-scale integration and operating company focused on delivering de-risked, reliable cash flow for its shareholders.
Given that most upstream acquisitions focus on increasing undeveloped inventory, Diversified Energy Company PLC (NYSE:DEC) offers a creative and actionable solution as the PDP purchasing partner for E&P’s that value inventory. The company has announced the closing of a transformative $1.3 billion acquisition of Maverick Natural Resources. Diversified Energy Company PLC (NYSE:DEC) expects to achieve more than $50 million in annual synergies by year-end 2025. The strategic acquisition can increase the company’s revenue and FCF while improving its margins and achieving expense synergies. Furthermore, it also closed the accretive bolt-on acquisition of assets from Summit Natural Resources and expects more than a 300% increase in cash flow from CMM environmental credit sales over the next 24 months.
8. MicroStrategy Incorporated (NASDAQ:MSTR)
Average Upside Potential: ~116.5%
Number of Hedge Fund Holders: 44
MicroStrategy Incorporated (NASDAQ:MSTR), doing business as Strategy, is engaged in providing AI-powered enterprise analytics software and services. The company announced that it intends to offer 5,000,000 shares of the company’s Series A Perpetual Strife Preferred Stock. It plans to use the net proceeds from the offering for general corporate purposes, which include the acquisition of Bitcoin and for working capital. On March 17, MicroStrategy Incorporated (NASDAQ:MSTR) announced that, during the period between March 10, 2025 and March 16, 2025, it acquired ~130 bitcoins for approximately $10.7 million in cash, at an average price of ~$82,981 per bitcoin. This includes fees and expenses.
MicroStrategy Incorporated (NASDAQ:MSTR)’s Bitcoin acquisition strategy continues to be aided by a series of capital-raising activities. The company has been successful in leveraging favorable market conditions and investor interest in a bid to finance the Bitcoin purchases. Overall, MicroStrategy Incorporated (NASDAQ:MSTR)’s ability to garner capital at scale for Bitcoin acquisition is being regarded as a positive indicator of strategic execution. Maxim upped the company’s price target to $500 from $480, keeping a “Buy” rating after it announced a rebranding to the name Strategy, which the firm opines is better aligned with the company’s dual focus as a bitcoin treasury company and a business intelligence software company.
Greenlight Capital, an investment management firm, published the Q4 2024 investor letter. Here is what the fund said:
“There is an open debate as to whether Bitcoin will at some point enter the mainstream as an official currency. In fact, there is a bill before Congress for the U.S. to establish a “Strategic Bitcoin Reserve” and buy one million Bitcoins over five years. The bill’s purpose appears to be the use of public funds to ramp up the price of Bitcoin, thereby enhancing the wealth of existing Bitcoin holders. This seems a dubious use of taxpayer funds, but the new administration has a lot of Bitcoin-owning supporters, so it might happen. More likely, cooler heads will decide that the government should not borrow another trillion dollars in the bond market to speculate in Bitcoin and that there is, in fact, nothing strategic about doing so.
One of the biggest owners of Bitcoin is MicroStrategy Incorporated (NASDAQ:MSTR). While MSTR owns a small software business, its principal pursuit is buying Bitcoin. In practice, MSTR is an investment company that buys and holds Bitcoin.2 MSTR trades at a large premium to the value of the underlying Bitcoin it holds. The idea is to raise money from new investors at a premium and use the proceeds to buy more Bitcoin. Since the Bitcoin that MSTR buys costs less than the Bitcoin-implied value of MSTR’s stock, the new investment is dilutive to new investors but accretive to existing investors. MSTR’s promoters have labeled the return to existing investors created by this scheme the “Bitcoin yield”. As Bitcoin itself yields nothing, the Bitcoin yield is simply a measure of the Ponzi finance’s effectiveness. Lately, it has been pretty effective.”
