We recently published a list of the 12 Best Stocks to Buy in 2025 for Beginners. In this article, we are going to take a look at where Thermo Fisher Scientific Inc. (NYSE:TMO) stands against other best beginner stocks to buy in 2025.
Stock Market Outlook for 2025
On December 12, Tom Lee, Fundstrat Global Advisors managing partner and head of research, appeared on CNBC to talk about his 2025 playbook. After two years of significant market gains, Lee’s playbook painted an optimistic yet cautious outlook for the stock market in 2025. He anticipated that the S&P 500 would rise to approximately 7,000 by mid-2025 before retreating to around 6,600 by the end of the year. This highlights an overall expected increase of about 8% for the year, consistent with historical averages for stock market returns.
Furthermore, Lee estimated the Earnings Per Share (EPS) for the S&P 500 to be around $260 in 2025, going up to $300 in 2026. These numbers are slightly below the Wall Street consensus estimates, which show an average of around $268 for 2025. Talking about his investment thesis, Lee believed several themes could bring a positive trajectory in the market in 2025. In his own Dickensian version, he predicted a “tale of two halves,” where the first half of 2025 is expected to see strong market performance, with a potential pullback in the second half. The positive first-half performance is attributed to factors such as market-friendly initiatives under President Trump’s administration and Federal Reserve policies. The pullback in the second half of 2025 reflects historical trends after strong consecutive years.
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Mega Cap Companies: Is There Potential?
Lee was of the opinion that the small-cap sector may have potential even though it has historically underperformed relative to large-cap stocks. He also talked about mega-cap companies and how they’re leading, mentioning that investors typically reach for these companies when there is even a possibility of risk in the market. In addition, mega-cap stocks are highly sensitive to falling interest rates. Since the tech market is bullish after the December rate cut is in effect, the investment case for megacaps is further strengthening.
However, despite an overall positive outlook, Lee acknowledged that several risks may impact market performance. For instance, he was of the view that the newly formed Department of Government Efficiency (DOGE) could potentially lead to reduced government spending and slower economic growth if it is too effective in cutting costs. Furthermore, the implementation of tariffs poses another concern, as tariffs can adversely affect corporate profits and financial conditions. Lee’s pointing out of historical patterns showed that after two years of considerable gains, markets are prone to decline in the latter half of the third year.
Our Methodology
We sifted through stock screeners, online rankings, and ETFs to compile a list of 40 blue chip companies with a 10-year revenue compound annual growth rate (CAGR) between 7%-15%. We then selected the top 12 stocks most popular among elite hedge funds. We sourced hedge fund data from Insider Monkey’s database. The stocks are sorted in ascending order of the number of hedge fund holders that have stakes in them, as of Q3 2024.
Why do we care about what hedge funds do? 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).
A workstation in a research lab stocked with laboratory products and services.
Thermo Fisher Scientific Inc. (NYSE:TMO)
10-year Revenue CAGR: 10.32%
Number of Hedge Fund Holders: 98
Thermo Fisher Scientific Inc. (NYSE:TMO) provides analytical instruments, reagents, equipment, software, and other services for analysis, research, diagnostics, and discovery. It operates through the Analytical Instruments, Life Sciences Solutions, Laboratory Products and Services, and Specialty Diagnostics segments.
The company’s recent quarters showed steady results. It reported around $10.6 billion in revenue in fiscal Q3 2024 and projects its annual revenue to come up to between $42.2 billion and $43.3 billion. Thermo Fisher Scientific Inc. (NYSE:TMO) holds a competitive market position due to its leadership in life sciences, long-term customer relationships, and high switching expenses. Its consumables and equipment are especially useful in drug development.
Thermo Fisher Scientific Inc. (NYSE:TMO) expects to continue its consistent growth, and management forecasts high-single-digit revenue growth in the coming years. The company’s strong cash position further bolsters its standing, as it generated over $2.1 billion in operating cash flow and $1.9 billion in free cash flow in fiscal Q3 2024.
Overall, TMO ranks 7th on our list of the 12 best stocks to buy in 2025 for beginners. While we acknowledge the potential of TMO, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than TMO but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
