Back in 1960, there was a movie called “The Magnificent Seven.”
Inspired by famed Japanese director Akira Kurosawa’s classic Seven Samurai, the movie follows seven hired gunfighters trying to liberate a village from oppressive bandits.
Starring a host of current and future Hollywood superstars (Yul Brynner, Steve McQueen, and Charles Bronson among them), the movie is one of the greatest westerns ever made.
The movie was remade in 2016 with big names such as Denzel Washington and Chris Pratt.
But flash forward to 2023… and the “Magnificent Seven” took on a whole new meaning.
Bank of America analyst Michael Harnett began using the phrase to describe a group of mega-cap tech growth stocks: Alphabet, Inc. (GOOG), Amazon.com, Inc. (AMZN), Apple, Inc. (AAPL), Meta Platforms, Inc. (META), Microsoft Corporation (MSFT), NVIDIA Corporation (NVDA) and Tesla, Inc. (TSLA).
These elite Big Tech companies were dominating the broader market at the time… and continue to do so… with their strong returns. That’s because they’ve been at the forefront of disruptive innovation in areas like electric vehicles, cloud computing, artificial intelligence – and more.
In 2023, the S&P 500 finished with a 24% gain, and technology stocks led the overall market higher. You can see how the Magnificent Seven performed in the table below…
| Stock | % gain in 2023 |
| Alphabet, Inc. (GOOG) | 59% |
| Amazon.com, Inc. (AMZN) | 81% |
| Apple, Inc. (AAPL) | 48% |
| Meta Platforms, Inc. (META) | 194% |
| Microsoft Corporation (MSFT) | 57% |
| NVIDIA Corporation (NVDA) | 239% |
| Tesla, Inc. (TSLA) | 102% |
| S&P 500 | 24% |
That outperformance largely continued in 2024, as you can see in the table below…
| Stock | % gain in 2024 |
| Alphabet, Inc. (GOOG) | 35% |
| Amazon.com, Inc. (AMZN) | 44% |
| Apple, Inc. (AAPL) | 30% |
| Meta Platforms, Inc. (META) | 65% |
| Microsoft Corporation (MSFT) | 12% |
| NVIDIA Corporation (NVDA) | 171% |
| Tesla, Inc. (TSLA) | 63% |
| S&P 500 | 23% |
I should point out that the Magnificent Seven are all mega-cap heavyweights. And since the S&P 500 is weighted by market capitalization, these stocks have a powerful effect on the broader market.
However, change is in the air this year, and money is on the move.
Now, I’m not suggesting that you should dump the Magnificent Seven out of your portfolio. But it’s clear to me that money is flowing into other stocks that are prospering from explosive sales and earnings growth.
The reality is that there are great opportunities in stocks that can outperform these heavyweights this year. I’m talking about quality stocks with superior fundamentals that will continue to boast strong earnings and sales growth.
So, in this report, I’m going to show you seven companies that are poised to beat the Magnificent Seven in 2025. With strong sales growth and profits ahead, these stocks are must-haves for your portfolio as we navigate through the year…
Stock #1: In Good Hands
This Top Stock was one of the first insurance companies to offer discounts for car safety features like airbags and anti-lock brakes. In fact, the company’s innovation also led it to be an early adopter of telematics technology.
In 2010, it introduced the Drivewise program, which uses data from a mobile app or plug-in device to track driving behavior. This allows customers to earn discounts based on their actual driving habits, making insurance more personalized and rewarding for safe drivers!
You may recognize it by its famous slogan “you’re in good hands.” What you may not know is that The Allstate Corporation (ALL) was founded by Sears executives back in 1931. At that time, many Americans were struggling through the Great Depression, and financial security was a top concern. Allstate inked its first insurance policy for a 1930 Studebaker in 1931, and by the end of the year, the company had 4,217 active car insurance policies.
Interestingly, the well-known tagline, “You’re in good hands,” has been with the company since 1950. Allstate’s vice president and general sales manager at the time had been told by a doctor not to worry about his sick child, stating, “You’re in good hands.” And the executive felt that was how Allstate’s customers should feel in the aftermath of incidents with cars and homes. So, the tagline stuck and has been at the heart of Allstate’s business and advertising ever since.
Today, Allstate has nearly 193 million policies, and through these policies, it provides a variety of insurance products and services. For example, Allstate offers insurance covering autos, boats, motorcycles and motorhomes; homeowners, renters and condos; and life, landlord, pets and business. The company also provides roadside assistance, extended vehicle care, identity protection and retirement/investment plans.
For full-year 2024, analysts expect earnings of $14.14 per share on revenue of $56.51 billion, up from earnings of $0.95 per share and revenue of $50.35 billion a year ago by 1,388.4% and 12.2%, respectively.
Stock #2: The Weight Loss Winner
Over the past 147 years, our next Top Stock for 2025 has developed approximately 100 drugs. Yet it never rests on its laurels, as it continues to research and develop new treatments to improve the lives of patients.
It’s one of two companies that has a lock on diabetes treatments and weight-loss drugs. The pharmaceutical company’s two most popular treatments – Zepbound for weight loss and Mounjaro for Type 2 diabetes – have both received approval from the U.S. Food and Drug Administration.
The company continues to experience unrelenting demand for its diabetes and weight-loss treatments. In order to keep up, it plans to invest heavily in manufacturing and supply capacity.
Aside from its weight-loss and diabetes treatments, Eli Lilly and Co. (LLY) has more than 100 drugs in its pipeline. And its efforts, coupled with robust demand for its treatments, keep adding to the company’s top and bottom lines.
Most recently, in September 2024, Lilly received FDA approval for Ebgylss, the company’s treatment for moderate to severe atopic dermatitis, or eczema. The treatment was approved for adults and children 12 and up who haven’t been able to control the skin disease with topical treatments.
Meanwhile, the next frontier for Lilly is AI. Lilly is experimenting with using generative AI to create molecules for drug discovery. The work is still in its early stages but promises to do in five minutes what would normally take researchers an entire year in a traditional lab setting.
To that end, Lilly recently announced a partnership with OpenAI in order to utilize that company’s generative AI to develop antimicrobials for the treatment of drug-related pathogens. Company management noted antimicrobial resistance is an “overlooked threat,” and its partnership with OpenAI illustrates Lilly’s “commitment to addressing significant health challenges experienced by people around the world.”
Looking to the numbers, analysts are calling for earnings of $13.43 per share and revenue of $46.22 billion for the current fiscal year. That represents a 112.5% rise in earnings from $6.32 per share and a 35.5% increase from revenue of $34.12 billion in the last fiscal year.
Stock #3: Helping the Buildout for the AI Boom
With the advent of AI, data usage has doubled between 2020 and 2023, and it’s expected to jump another 50% by 2025. In fact, we’re expected to create twice as much data in the next five years compared to what we created in the previous 10 years. To put that in perspective, we now generate nearly 1 trillion gigabytes of data a day!
That’s enough to download every single movie ever made – over 600,000 times – every day.
The fact of the matter is that as AI learns and becomes more powerful, we need more data centers – and more powerful, too.
That’s where EMCOR Group, Inc. (EME) comes in.
The company provides everything from data center services to electrical maintenance, from new construction to energy services and upgrades. And with the U.S. looking to upgrade to more energy-efficient systems, as well as to onshore more chip production, EMCOR stands directly in line to benefit.
You may recall that the CHIPS and Science Act was inked with the intention to provide about $53 billion to support the production of semiconductors in the U.S. Under the act, the U.S. aims to construct at least two manufacturing clusters (including fabrication plants, R&D facilities, packaging and assembly facilities, and suppliers) for the production of semiconductors by 2030.
Big-name semiconductor companies like Intel, Samsung, Taiwan Semiconductor, Micron Technology and Texas Instruments have all also pledged to expand and upgrade their facilities in the U.S. All of which is creating strong demand for the services and solutions that our new buy provides.
Below is a sampling of the services and solutions that EMCOR Group provides through its three businesses.
- EMCOR Construction Services employs contractors with mechanical and electrical experience in several U.S. markets, including commercial, education, healthcare, hospitality, institutional, manufacturing, transportation and water/wastewater treatment. Its services range from new facility construction to fire safety, from data center services to electrical maintenance, from commercial and industrial HVAC duct work to project management.
- EMCOR Buildings Services provides a range of comprehensive building services, including site maintenance, renovation and retrofits, energy services, HVAC and mechanical services, landscaping, construction and energy efficiencies upgrades.
- EMCOR Industrial Services collaborates with clients in heavy industries, providing quality assurance and quality control services, engineering, expertise in handling hazardous materials and chemicals, construction and fabrication services.
For fiscal year 2024, analysts are calling for earnings to increase 46.7% to $19.53 per share, up from $13.31 a year prior. Likewise revenue is expected to come in 16.9% higher at $14,7 billion, up from $12.58 billion last year.
Stock #4: Using AI for Smarter Insurance
The insurance industry can trace its roots back to around 1750 B.C.
The first American insurance company was established in 1752, by Benjamin Franklin.
Fast-forward to today, and this centuries old industry is undergoing a quiet revolution, thanks to AI – and Guidewire Software, Inc. (GWRE) is leading the charge.
The company serves property and casual (P&C) insurance companies around the world. The company’s platform combines artificial intelligence, analytics, core and digital, allowing P&C insurers to digitally transform their businesses and how they operate. Guidewire Software’s core products include:
- InsuranceSuite: trusted by more than 300 P&C insurers globally, as it merges end-to-end insurance processes and encompasses the entire insurance lifecycle. This includes BillingCenter, ClaimCenter and PolicyCenter,
- InsuranceNow: a one-stop, cloud-based platform that also supports the insurance lifecycle, with policy, billing and claims functionality. About 50 insurance carriers in the U.S. utilize InsuranceNow, and more than $7.0 billion in total direct written premium is run across the platform.
Looking ahead to full-year 2024, analysts expect earnings of $1.93 per share on revenue of $1.14 billion, up from earnings of $1.35 per share and revenue of $980.5 million a year ago by 42.9% and 16.3%, respectively.
Stock #5: To Infinity and Beyond
I’m sure many of you have heard about or learned about the Apollo space missions. Well, this Top Stock produced critical components for the Saturn V rocket, which allowed the Apollo missions to the moon.
They provided high-strength, heat-resistant metal parts for the rocket’s engines, which were essential to withstand the intense forces and temperatures of launch and space travel. This legacy of aerospace innovation has continued, with this company now being a key supplier for commercial and military aircraft worldwide.
Likewise, this Top Stock was instrumental in developing the single-crystal turbine blade, which improved jet engine efficiency by enabling blades to withstand extreme temperatures and stresses. These innovations help modern aircraft engines run hotter and more efficiently, making flights more fuel-efficient and environmentally friendly.
Today, Howmet Aerospace, Inc. (HWM) is a Pennsylvania-based company that develops engineered solutions for the aerospace and industrial industries. Specifically, Howmet Aerospace operates four main businesses, including:
- Engine Products: The company focuses on developing fuel-efficient engines for airplanes and gas turbines. It also provides components like airfoils, disks, forgings and rings.
- Fastening Systems: Howmet Aerospace is the leading global provider of aerospace fastening systems, as well as the top producer of commercial transportation fasteners. These products are vital to cars, commercial vehicles, construction/industrial equipment and industrial gas turbines.
- Engineered Structures: The company utilizes casting, extruding, forging, hot forming and machining to produce titanium and aluminum products for the aerospace and defense industry.
- Forged Wheels: Howmet Aerospace introduced the very first forged aluminum truck wheel 76 years ago, and today, it remains number one.
The commercial aerospace industry has been a big driver of Howmet Aerospace’s growth in recent years, and that’s been apparent in the company’s recent quarterly results.
Looking ahead to full-year 2024, analysts expect $2.59 in earnings on $7.45 billion in revenue. That is up 40.7% from earnings of $1.84 and 12.2% from revenue of $6.64 billion a year ago.
Stock #6: The Data Center Dynamo
The global AI market is rapidly expanding. In 2020, the global AI market was worth about $281.4 billion. But by 2030, some analysts anticipate the AI market to be worth north of $1.8 trillion!
The fact is, as data centers being to grow in scale, they will need companies who build customized and fully integrated solutions to ensure reliability. And that is where Powell Industries, Inc. (POWL) comes in.
Brett Cope, CEO of Powell, stated, “we are prepared for this future and are building relationships with both hyperscalers as well as co-locators.”
Powell focuses on the development and manufacturing of equipment and systems for electrical infrastructure. These systems are used by petrochemical plants, and also pulp and paper mills, oil and gas producers, utilities and transportation facilities.
The company’s operations are spread around the world, with facilities in the United States, as well as the United Kingdom, Canada, Singapore, United Arab Emirates and Bahrain. Through these sites, Powell Industries provides systems and products for the distribution and control of electrical energy and other processes.
Here is a sampling of the products that Powell Industries offers: switchgears, circuit breakers and power rectifiers, as well as distribution systems, high resistance grounding, EV charging solutions, heat tracing and motor controls. Powell Industries also provides a variety of engineering, procurement, integration and construction services.
When it comes to artificial intelligence, Powell has begun laying the groundwork to support both AI and machine learning. And they are doing so while focusing on data centers. Data centers are essential to powering artificial intelligence workloads as they typically consist of high-performance servers, storage systems, networking infrastructure and specialized hardware accelerators.
For fiscal year 2024, analysts expect earnings of $12.06 per share up 192.7% from earnings of $4.12 per share a year prior, and revenue of $1.05 billion up 50.2% from revenue of $699.31 million a year ago.
Stock #7: Harness the Power of Nuclear Energy
All of the data processing means hyperscale data centers use more electricity than almost any building ever built. By 2025, AI data centers worldwide are expected to consume as much energy as entire midsize nations, like Japan and the Netherlands. And by 2028, U.S. data centers are expected to reach 30 gigawatts – nearly double 2022’s usage. Each gigawatt is equal to the amount of power generated by one nuclear power plant.
But as AI’s needs for electricity expand, the industry is facing a shortage of power. Elon Musk believes we could run out of power for AI data centers as soon as 2025. And without enough electricity, data center building will screech to a halt and the growth of the AI industry could be severely stunted.
This pick had the foundation of its business laid more than 140 years ago, back in 1882, when the first electric lights were installed in Dallas.
Today, this Irving, Texas-based company (still well within the Dallas area) is one of the biggest power generators in the United States, with about 37,000 megawatts of power generated from natural gas, nuclear, solar and battery storage facilities. The company offers reliable and efficient power solutions to approximately 4 million customers – residential, commercial and industrial – in 20 states, as well as Washington, D.C.
Vistra Corp. (VST) also dabbles in renewable energy. And when I say “dabble,” I mean the company has more than 50 renewable energy plants. I should also add that Vistra has a 750-megawatt (3,000-megawatt-hour) battery storage system in California, which is the largest in the world.
This past year, Vistra announced its collaboration with Sunrun, Inc. (RUN) to develop a new program for homeowners to boost the electric grid in Texas. Sunrun operates more than 12 power plants throughout the U.S., including a big virtual power plant program. The two companies plan to create the TXU Energy & Sunrun Battery Rewards program that will combine power in residential, solar-connected batteries to create another virtual power plant that sends energy back to the grid when necessary.
I should note that in March 2024, Vistra completed a previously announced $3.4 billion deal to acquire Energy Harbor, making Vistra the second-largest nuclear power provider in the U.S. The company also owns the Moss Landing Power Plant in California, which contains the largest battery energy storage system in the world.
For fiscal 2024, analysts expect earnings of $4.60 per share on revenue of $17.12 billion, up 28.5% from earnings of $3.58 per share and 15.9% from revenue of $14.78 billion in fiscal 2023.
There’s Always a Bull Market Somewhere
There’s always a bull market somewhere – and right now the bulls are piling into fundamentally superior stocks.
The companies we discussed today… seven stocks that I believe will outperform the Magnificent Seven this year… fit this description to a “T” and are great bets for your money in 2025.
I hope you found this special report useful. Before we go, let me remind you that you’re now also a member of my free Market 360 newsletter.
In Market 360, we discuss a variety of topics, ranging from the latest happenings in the markets to updates on stocks, earnings, exciting new trends and much, much more. Keep an eye on your email inbox for my next Market 360 article soon. I typically send them every Tuesday, Thursday, Friday and Saturday. In the meantime, you can check out the Market 360 archive by clicking here.
Sincerely,
Louis Navellier
Editor, Market 360
