Supercharge Your Portfolio With These 3 Key Stocks
The stock market is focused on the potential impacts of a new United States administration in the financial and business scene. For good reason, investors should start looking into potential plays that can be made in the coming months to supercharge their portfolio performance during 2025. To align their portfolios with this sort of upside, a couple of things need to be set in place.
First and foremost, given the currently high index valuations in the S&P 500 according to Goldman Sachs and its 2025 macro outlook report, a more favorable risk-to-reward setting needs to be present in individual stocks selected by investors moving forward. Apart from a favorable setup, these companies need to showcase a fundamental tailwind behind them to justify higher prices soon.
Today’s list fits both of these requirements, as stock prices trade low enough to give investors a favorable risk-to-reward setup as well as plenty of tailwinds behind the bullish cases present today. Stocks like Nike Inc. (NYSE: NKE), Advanced Micro Devices Inc. (NASDAQ: AMD), and even Alibaba Group (NYSE: BABA) could act to supercharge portfolios this 2025 while also diversifying across different sectors of the economy.
Nike’s Discount: A Grab Opportunity for Wall Street
Now that Nike trades at only 67% of its 52-week high price, it has recently become the subject of much of the value investing community’s attention. Surely the markets have a reason for beating this stock to such lows, and it can be connected to the premium in the dollar index today.
Considering that Nike is a significant international brand, overseas sales are expected to take a break and keep declining as long as the dollar is as strong as it is today. This is because foreign currencies and buyers have relatively lower buying power to buy American goods such as Nike products.
With this in mind, the company has to rely more and more on domestic consumption, which hasn’t been all that strong lately as consumer credit tightens due to rising living costs. However, there is a shift from Morgan Stanley analysts that might turn this story on its head.
These analysts now see a decline in the dollar, which would significantly boost Nike’s international sales while cushioning the domestic down cycle. This might be why Bill Ackman decided to buy a stake of over $230 million worth of Nike stock in recent quarters.
With a recent price target boost to $90 a share on Nike stock, alongside an overweight rating, Piper Sandler analysts see a 25% upside in the company as of January 2025. This name clearly fits the favorable risk-to-reward criteria investors need today.
Advanced Micro Devices: The Semiconductor Outlier
The days of NVIDIA Co. (NASDAQ: NVDA) being the king of the technology sector are fading. Now markets might look deeper into the fundamental setups in the peer group to figure out which stocks really deserve to trade at premium valuations.
Driven by a discount of up to 54% of its 52-week high, Advanced Micro Devices stock offers an attractive gap to be filled next to NVIDIA stock’s 91% of its 52-week high. Acting as a catalyst to fill this gap is the Wall Street analyst forecasts for up to $4.88 in earnings per share (EPS) for 2025, meaning a boost of 62.6% from 2024 levels.
On the other hand, NVIDIA analysts forecast EPS of $2.94 for 2025, implying a growth rate of only 12.2% to fall significantly below Advanced Micro Devices' forecasts. Since EPS typically drives stock valuations, investors have a relatively attractive setup to take advantage of in this stock today.
Knowing this, analysts have also placed a consensus price target of $177.7 on Advanced Micro Devices stock, calling for up to 45.5% upside from today’s discount.
Chinese Stocks to Rally in 2025
Following the same thesis behind Nike’s potential rally, a lower dollar will also boost emerging markets and other overseas stocks. With China being the center of negative media today, investors seeking value will likely call the bluff on this pessimism.
Some already have, such as David Tepper and Michael Burry, after they made Alibaba stock the largest holding in their respective funds. It would be no surprise for investors to see Citigroup analysts boost Alibaba stock to a buy rating alongside a $138 a share price target, calling for a net rally of up to 62% from where it trades today.
Today, that price looks more like 72% of the stock’s 52-week high, so the potential downside might already be priced into the quote today. This would, of course, leave investors with the sort of risk-to-reward setups that will likely act to supercharge their portfolios this 2025.
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