We recently published a list of 12 Stocks to Buy with Exponential Growth in 2025. In this article, we are going to take a look at where Block, Inc. (NYSE:XYZ) stands against other stocks to buy with exponential growth in 2025.
With the Trump administration implementing the tariff agenda, global markets continue to feel the impact, with sell-offs taking place as investors are on their toes due to the implications of a dynamic trade landscape. Morgan Stanley believes that stocks in sectors having increased foreign revenue exposure, including technology, materials and energy, can be more vulnerable to tariff uncertainties. If tariffs remain long-lasting, there is a possibility that defensive stocks in sectors like health care and utilities might outperform cyclicals, including consumer discretionary companies.
Resilient Sectors Amidst Uncertainties
The technology, energy, materials and industrials sectors, having foreign revenue exposure as high as 57%, are especially exposed to tariffs, says Morgan Stanley. For instance, the tariffs targeting aluminum and steel can impact the materials sector, while tariffs specific to China or retaliation efforts can have secondary impacts for broader technology space. If the tariff regime escalates, the firm opines that the utilities and healthcare sectors are expected to outperform because of their defensive nature and lower tariff exposure.
If the long-lasting tariff regime comes into action, the defensive US stocks can outperform cyclical sectors such as industrials or consumer discretionary. This is because cyclical sectors are more vulnerable to higher import costs as well as a reduction in international trade. Furthermore, the consumer discretionary companies that have higher reliance on revenues garnered from lower-income consumers can witness the most pressure.
READ ALSO: 7 Best Stocks to Buy For Long-Term and 8 Cheap Jim Cramer Stocks to Invest In.
Amidst Tariffs, What Lies Ahead for US Economy?
The strong consumer spending has been driving the economy, and Dr. David Kelly (Chief Global Strategist at J.P. Morgan Asset Management) anticipates another year of 2% GDP growth. One critical impact of Trump’s immigration policies can be less job growth. Another important focus of the Trump administration revolves around deregulation, which is expected to have positive impacts on investing. Kelly believes that deregulation or lack of additional regulation is expected to help some areas, mainly for financial markets.
There could be an increase in bank lending and private credit. Kelly believes that private equity markets and cryptocurrencies are expected to gain the most from deregulation. The outlook on corporate profitability this year remains significantly good. Kelly opines that there has been a broadening out of profits. Earlier, there were technology companies and the Mag Seven and the like who were making money. Now, in Q4 2024, 9 out of 11 S&P 500 sectors witnessed a gain.
Our Methodology
To list the 12 Stocks to Buy with Exponential Growth in 2025, we used a screener to shortlist the companies that analysts see significant upside to. The stocks were ranked in ascending order of their average upside potential, as of March 14. We also mentioned the hedge fund sentiments around each stock, as of Q4 2024.
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).
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Block, Inc. (NYSE:XYZ)
Average Upside Potential: ~66.0%
Number of Hedge Fund Holders: 81
Block, Inc. (NYSE:XYZ) is engaged in building ecosystems focused on commerce and financial products and services. BMO Capital upped the company’s stock to “Outperform” from “Market Perform” with a price objective of $89. The firm sees an attractive entry point after the recent sell-off. Notably, Block, Inc. (NYSE:XYZ)’s stock has seen a decline of ~32% over the past month. As per the analyst, the Street estimates have lower downside risk, while investor sentiment and positioning remain more balanced. The firm expects potential for sentiment to witness improvement through 2025 as Cash App accelerates profit growth.
Elsewhere, BTIG analyst Andrew Harte kept a “Buy” rating on the company’s stock with the price objective of $110. Block, Inc. (NYSE:XYZ) announced that its industrial bank, Square Financial Services, Inc., got approval from the FDIC to begin offering the consumer loan product Cash App Borrow. As per the analyst, Block, Inc. (NYSE:XYZ) is expected to improve its gross profit over the upcoming 2 years while expanding its operating margins as it has been deepening relationships with Cash App users and Square merchants. At the time of Q4 2024 results, Block, Inc. (NYSE:XYZ) highlighted that it scaled Cash App Borrow to ~$9 billion in originations over the past year, implying robust customer demand for easy-to-repay small loans.
Overall, XYZ ranks 6th on our list of stocks to buy with exponential growth in 2025. While we acknowledge the potential of XYZ as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for a deeply undervalued AI stock that is more promising than XYZ but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires
Disclosure: None. This article is originally published at Insider Monkey.
