I'm Excited about these 5 Stocks I Plan to Purchase in 2025
Investors have plenty to be grateful for in 2024. They've seen the Dow Jones Industrial Average, S&P 500, and Nasdaq Composite all climb higher by a double-digit percentage and touch multiple record-breaking highs.
But investing is all about looking ahead. As we approach turning the page to 2025, here are five standout stocks I'm eager to purchase.
Sirius XM Holdings
The first stock I plan to add to my portfolio in the new year is satellite-radio operator Sirius XM Holdings (SIRI -1.32%). Despite facing increased competition from online radio companies and lowering its 2024 sales forecast, there are several factors that make Sirius XM an enticing investment.
To begin with, it enjoys a legal monopoly. Being the only licensed satellite-radio operator often grants the company considerable subscription pricing power. With Spotify Technology raising its subscription prices in June, Sirius XM smartly adjusted its pricing structure in November, focusing on subscription simplicity instead of discounts.
Sirius XM is also better prepared than terrestrial and online radio providers to weather potential economic downturns in the U.S. While traditional radio companies rely almost exclusively on advertising to stay afloat, Sirius XM gathers nearly 77% of its net sales through the first nine months of 2024 from subscriptions. Individuals are less likely to cancel their Sirius XM service during economic uncertainty than advertisers are to cut back their spending.
The valuation is hard to ignore, either. This Warren Buffett favorite stock is valued at less than 8 times forward-year earnings in a historically expensive stock market, and offers a 5% dividend yield approaching.
Pfizer
A second stock I can't wait to buy in 2025 is the pharmaceutical titan Pfizer (PFE 0.23%). Pfizer's stock has taken a beating due to the decline in sales of its COVID-19 therapies, Comirnaty and Paxlovid. However, this overlooked situation presents an opportunity for long-term investors.
Though the estimated combined sales for Comirnaty and Paxlovid of $8.5 billion in 2024 will be significantly lower than the more than $56 billion recorded in 2022, Pfizer's net sales, based on the midpoint of its guidance in 2024, have increased by 46% over the last four years. Investors seem to be solely focusing on the decline in COVID-19 drug sales, while overlooking Pfizer's continuing growth in its core operating segments, such as oncology and specialty care.
Another major catalyst for Pfizer in 2025 and beyond is its acquisition of cancer-drug developer Seagen, completed in December 2023. This $43 billion deal significantly increases the size of Pfizer's oncology pipeline and immediately boosts sales. Beginning in 2025, it is expected to improve earnings per share (EPS) and generate tangible cost savings.
Like Sirius XM, Pfizer's relative valuation and yield are highly appealing. A forward price-to-earnings (P/E) ratio of 9, and a historically high yield of 6.5%, suggest that Pfizer is a screaming deal.
Alibaba
Next on my list of stocks to buy in 2025 is China-based e-commerce leader Alibaba (BABA -1.19%). Although there are concerns about U.S.-China trade relations following Donald Trump's November election victory, these worries seem to be fully reflected in Alibaba's historically low valuation.
Alibaba is China's top online retail platform, with the International Trade Administration estimating in 2023 that Taobao and Tmall account for almost a 51% share of online sales. While online sales have matured in the U.S., China's growing middle class promotes extended growth opportunities for e-commerce.
Furthermore, Alibaba is the leading cloud infrastructure service platform in the world's second-largest economy -- a 39% market share entering 2024, according to Canalys. Alibaba is capitalizing on the AI revolution and is counting on its cloud segment to enhance its margins and sustain double-digit growth.
Alibaba's financials and valuation also make it a compelling investment, offering investors flexibility to repurchase stock and fund growth initiatives. At less than 9 times forward earnings, you'd be hard-pressed to find a more attractive China stock.
PubMatic
Along with Sirius XM, another existing holding I'll be looking to add to my portfolio in 2025 is adtech stock PubMatic (PUBM -2.14%). Although concerns persist about the health of the U.S. economy -- ad spending is highly cyclical -- PubMatic is well-positioned within the ad industry to deliver consistent low-double-digit earnings growth.
PubMatic's strategy is to focus solely on digital advertising. Its cloud-based programmatic ad platform helps publishing companies sell their digital display space, with a focus on video, mobile, and connected TV. Since economic expansions in the U.S. tend to last longer than recessions, ad-driven businesses like PubMatic are situated on the right side of history.
Something else that makes PubMatic an appealing investment is the (in retrospect) choice made by its leadership team to create its cloud-based infrastructure. Opting for a third-party service would have been the simpler path, but building its own platform means PubMatic retains more of its earnings as it expands. Essentially, this should result in better operational profitability in the long run.
PubMatic, with its substantial cash reserves, is a solid investment choice, considering its strong potential for long-term growth. The company closed Q3 with $140.4 million in combined cash, cash equivalents, and marketable securities, and carries no debt. Furthermore, it's valued at 18 times its projected earnings for the upcoming year, while still capable of maintaining double-digit EPS growth.
Johnson & Johnson
The fifth stock I'm eager to include in my portfolio in 2025 is none other than Dow Jones Industrial Average member Johnson & Johnson (JNJ -0.36%). Some investors might be wary due to the ongoing talcum-based baby powder lawsuits, but Johnson & Johnson's future looks promising despite these financial uncertainties.
Firstly, it's worth noting that Johnson & Johnson is one of the two publicly traded companies with the highest credit rating (AAA) from Standard & Poor's. Despite the legal complications, Johnson & Johnson has an ample cash flow from operations and sufficient cash reserves to cover any potential settlements.
Secondly, investors can have confidence in Johnson & Johnson's shift towards innovative drug development. Although branded drugs have a limited period of sales exclusivity, they provide Johnson & Johnson with a faster growth trajectory and higher profit margins.
Lastly, Johnson & Johnson stock remains an economical choice. Its forward P/E ratio of 13.7 is a decade-low. Meanwhile, its 3.4% dividend yield is close to its 10-year high.
In the context of investing for 2025, financial analysts might consider purchasing shares of Johnson & Johnson (JNJ -0.36%), despite ongoing talcum-related lawsuits. They may be reassured by Johnson & Johnson's strong financial position, as it's one of the two publicly traded companies with the highest credit rating (AAA) from Standard & Poor's.
Moreover, investors should keep an eye on the financial sector, as opportunities for investing money may arise. For instance, during economic downturns, some investors might look for stable, dividend-paying stocks like banks, which can offer attractive yields. So, monitoring the finance sector for potential purchases could be beneficial for those seeking steady returns.
