In a 1988 letter to shareholders, investing legend Warren Buffett wrote: “Our ideal holding period is forever.” Forever may be a bit optimistic, but what about the next few years? These could be the stocks to buy in 2025 … or sell, depending on who you ask.
Which stocks have the potential to post killer returns over the next decade? These are the stocks that are still looking cheap now when you expand your investing perspective into the future. And on the flip side, which stocks are riskier on a longer-term basis? These are the stocks to cast out from your portfolio sooner rather than later.
To find these stocks you have to consider not just the fundamentals, but also the trends that are shaping the outlook for society’s future. Here I turned to RBC Capital Market’s Imagine 2025 report to pinpoint the most and least promising long-term stocks by sector.
As the report states: “Sector-specific opportunities and threats were concurrently described by each team and company-specific thoughts were distilled down to put a spotlight on perceived leaders and laggards.”
I also use TipRanks market data to get an idea of what the Street has to say about these stocks right now. Let’s take a closer look at these 2025 stock leaders and laggards now:
Consumer Goods Leader: Monster Beverage (MNST)
Energy drink giant Monster Beverage (NASDAQ:MNST) is gearing up for long-term growth. The company is the owner of popular hardcore energy drink brands like Monster and Relentless.
According to RBC Capital, Big Data, artificial intelligence (AI) and virtual reality will change how consumers operate. We can expect a world with more personalized products and marketing. This requires heavy tech investment now — even if it dilutes near-term earnings. “We also believe it is imperative that companies are agile” adds the firm.
According to RBC, Monster “has proven its willingness to sacrifice near-term results to invest for future growth.” This is a company that “continues to see the bigger picture in an ever-changing retail environment.” Overall the stock has a cautiously optimistic moderate buy analyst consensus.
Specifically, RBC’s Nik Modi (Profile & Recommendations) highlights Monster as a “Focus Pick.” In the near-term, he sees prices rising 24% to $75. He concludes that, when it comes to MNST, “history suggests that buying the dips is a profitable strategy.” See what other Top Analysts are saying about MNST.
Consumer Goods Laggard: Procter & Gamble (PG)
Procter & Gamble Company (NYSE:PG) owns more brands than you can think of. For starters, consider Gillette, Pantene and Herbal Essences. However, as RBC points out, “PG is not operating in a vacuum.” According to Modi: “Competition, pressures from retailers, private label, and macro dynamics could continue to lead PG to miss on expectations.”
And on a broader level, RBC describes PG as a “hamster on a wheel.” Large CPG [consumer packaged goods] companies — and PG in particular — “are getting disrupted by the rise of online and smaller upstarts because they lack the courage or the conviction to take the near-term EPS hit to invest in areas that could ultimately lead to a competitive advantage.”
This means in-house digital capabilities, R&D, product quality, better digital and traditional marketing.
Overall, four analysts have published hold ratings on PG in the last three months. No buy ratings here — although also no sells. RBC’s Nik Modi’s $79 price target predicts 2% downside from the current share price. Depressing! See what other Top Analysts are saying about PG.
Auto Leader: Tesla (TSLA)
Say what you like about Tesla (NASDAQ:TSLA) but there’s no denying this company is focusing on the future. And if we turn to 2025, RBC Capital sees four megatrends in the auto industry: Connected, Autonomous, Shared and Electric (CASE). “TSLA is a pioneer in electric vehicles and is collecting more data per production unit than anyone else” writes the firm.
However, it acknowledges, “We give credit to companies that recognize coming change and are investing for the future but they also have tough choices ahead.” If we turn to Tesla that story is very clear. RBC’s Joseph Spak (Profile & Recommendations) writes: “While we don’t have meaningful reason to doubt that Tesla can eventually achieve its targets, doing so in a timely manner without some growing pains could prove challenging.” Indeed, “Tesla is essentially learning how to become a manufacturing company on the fly.”
Overall, Tesla has a Hold analyst consensus rating. Analysts are clearly very divided on the stock. In the last three months, TSLA has received nine buy, seven hold and eight sell ratings. This is with a $300 average analyst price target. See what other Top Analysts are saying about TSLA.
Auto Laggard: Tenneco (TEN)
Tenneco Inc. (NYSE:TEN) is a leading supplier of replacement parts. This includes manufacturing of automotive exhaust systems and components.
Unfortunately, however, RBC says: “TEN’s legacy business increasingly will not be needed as vehicles get more electrified.” It wonders how TEN’s portfolio adapts to the new world.
In the last three months, only one analyst has published a buy rating on TEN stock. This is versus three hold ratings. “Valuation attractive, but don’t see a catalyst” writes RBC’s Joseph Spak.
He has a $50 price target on the stock (10% upside potential). Bear in mind, Spak is the best-performing analyst covering TEN stock. See what other Top Analysts are saying about TEN.
E-commerce Leader: Alphabet (GOOGL)
Big Data and Cloud Computing will become ubiquitous by 2025, as will AI and Machine Learning. This is good news for Alphabet (NASDAQ:GOOGL), which has heavily invested in AI. Plus, it has the Big Data access and Compute Power infrastructure to benefit most from these AI and ML developments.
Take its self-driving unit Waymo as an example. “GOOGL appears particularly well situated to lead autonomous vehicle innovations, given its substantial investments in Waymo autonomous vehicle technology” says RBC Capital. Waymo has achieved 8 million miles of driving on city streets, adding the latest 3 million in just three months.
“Moreover, we believe the commercialization of Waymo by year-end in Phoenix could be a catalyst for the stock in the near/medium term, leading to a potential rerating in GOOGL’s multiple” states five-star RBC Capital analyst Mark Mahaney (Profile & Recommendations). He has a $1,400 price target on the stock (12% upside potential).
Not surprisingly, GOOGL remains one of the Street’s favorite stocks. No less than 30 analysts have buy ratings on GOOGL versus just three hold ratings. This is with a $1,379 average price target (10% upside potential). See what other Top Analysts are saying about GOOGL.
E-commerce Laggard: eBay (EBAY)
The outlook is far less promising for e-commerce platform eBay (NASDAQ:EBAY). It faces a big challenge when it comes to future growth: powerful rival Amazon.com, Inc. (NASDAQ:AMZN).
RBC Capital writes in the report, “The challenges for EBAY will intensify as AMZN ‘s substantial investments in Big Data, AI & Robotics will likely lead to a more compelling user experience, further widening the competitive gap between the two leading ecommerce companies.”
Currently, this moderate buy stock scores 16 buy, seven hold and one sell rating. RBC Capital’s Mark Mahaney has a “buy” rating on the stock. However, he has just lowered his price target from $51 to $47.
“Q2 was a Miss & Lower Quarter for EBAY” explains Mahaney. He blames most of the shortfall due to StubHub weakness driven by a weak concert, sports, and theater season. See what other Top Analysts are saying about EBAY.
IT Leader: Micron (MU)
Red hot chip stock Micron Technology, Inc. (NASDAQ:MU) is only set to get hotter. This is because the incredible amount of data generated by AI, AR/VR and autonomous driving will require significantly higher memory (both NAND and DRAM). According to RBC Capital this will “lead to strong and long-term tailwinds for MU.”
Even the current outlook for the stock is upbeat. With a bullish “strong buy” analyst consensus, the Street is predicting prices will surge to $83. This translates into 54% upside from current prices. Indeed, RBC Capital’s Amit Daryanani (Profile & Recommendations) has just reiterated his MU “buy” rating. This is with an $83 price target. Bear in mind, this is one of the Top 50 analysts ranked by TipRanks (out of over 4,800).
“Our bullish bias on MU is predicated not on there being no more cycle but rather on our belief that the cycle(s) going forward will be more muted and less volatile. This inherently means that memory companies broadly should earn more profits and FCF over the cycle than historical trends would suggest” he argues. See what other Top Analysts are saying about MU.
IT Laggard: Hewlett Packard (HPE)
From a leader to a laggard. For IT stock Hewlett Packard Enterprise Company (NYSE:HPE) “continued migration to cloud will pose headwind (sic) to the company.” In his most recent report, Daryanani notes the risk that “IT customers adopting a public cloud-only model could decrease demand for on-premise and/or hybrid solutions.” And worst of all, some of the firm’s traditional partners have become competitors as they diversify product offerings.
Robert W Baird’s Jayson Noland (Profile & Recommendations) echoes RBC’s concerns. He writes:
“Given the monumental disruption occurring in enterprise IT caused by shifts to cloud computing and software as a service, HPE faces challenges in the majority of its core markets. Cloud providers offer competitive solutions to HPE and are difficult for the company to sell to.”
As a result, HPE may resort to pricing aggression, driving down product revenue.
Even now, analysts are staying sidelined on the stock. In the last three months, eight analysts have published hold ratings. This is versus just one buy rating and three sell ratings. Meanwhile, the average analyst price target stands at $19. See what other Top Analysts are saying about HPE.
Healthcare Leader: Abbott Labs (ABT)
Global healthcare giant Abbott Laboratories (NYSE:ABT) is one of the most diversified healthcare product companies in the world. Most notably, the company already provides products that are engaging with their end-customers.
ABT’s Libre is a sensor-based continuous glucose monitoring (CGM) system, which lets the patient see their glucose patterns and trends to help better manage their diabetes. Unlike traditional finger prick tests, this GSM automatically measures blood sugar every minute.
RBC Capital writes, “With an aging population, unhealthy lifestyles, and rising awareness, we believe healthcare monitoring will drive growth, particularly in the diabetes and cardiac ambulatory markets.”
Indeed, Libre growth continues at a rapid pace. According to RBC’s Glenn Navarro (Profile & Recommendations), “US Libre sales can exceed $100M in 2018, and we believe that it will be a $1B product in the US alone in the next 2-3 years.”
RBC isn’t the only bull in the picture. ABT has a strong buy analyst consensus with a $73 price target (12% upside potential). See what other Top Analysts are saying about ABT.
Healthcare Laggard: NuVasive (NUVA)
Medical device stock NuVasive, Inc. (NASDAQ:NUVA) is focused on products for the surgical treatment of spine disorders. “Although these companies have innovated technologies within their specialties (e.g. spine – expandable cages, TAVR, etc.), these companies lack the use of big data for more personalize and real-time information for patients to leverage,” says RBC Capital.
Tellingly, both JP Morgan and Merrill Lynch downgraded the stock in the last month. JP Morgan’s Robert Marcus (Profile & Recommendations) sees limited upside amid “challenging” spine end-market dynamics.
Meanwhile, Merrill Lynch’s Bob Hopkins (Profile & Recommendations) now has a “sell” rating on NUVA. This comes with a bearish $56 price target (4% downside).
He is skeptical NuVasive can maintain high single-digit revenue growth, citing robotics momentum and lack of a differentiated product. See what other Top Analysts are saying about NUVA.
TipRanks.com offers exclusive insights for investors by focusing on the moves of experts: Analysts, Insiders, Bloggers, Hedge Fund Managers and more. See what the experts are saying about your stocks now at TipRanks.com. As of this writing, Harriet Lefton did not hold a position in any of the aforementioned securities.