The year 2024, which ends this week, was a strong year in the American stock market, with a return of over 25% in the S&P 500 index, after in 2023 it rose by about 24%. As every year, the American economic magazine Barron’s (Barron’s) marks its 10 favorite stocks for investment in 2025.
According to the people of the magazine, the market is expensive and their recommended list includes stocks that trade at a profit multiple similar to or lower than the market. They point to the shares of the “Magnificent Seven” (the American technology giants) which in 2024 continued to be “unstoppable”, but while some estimate that the phenomenon will continue, Barron’s takes a different approach. “Our list of 10 favorite stocks for 2025 reflects an expectation that opportunities exist outside the Magnificent 7, and that overall stock market returns could be weak after two strong years in the S&P 500,” they wrote. However, they still include one of the seven in their recommended list – Alphabet (Google) .
By the way, those who followed Baron’s investment recommendations in 2024 cannot be particularly satisfied; After the magazine’s 2023 list outperformed the S&P 500, the 2024 list produced an average return of just 11.4%, a significant shortfall of more than half compared to the flagship index. In 2022, the list produced a negative return of 1.7%, compared to a negative return of 12.1% in the index. Among the stocks that the magazine recommended last year, we can mention on the one hand Berkshire Hathaway Warren Buffett’s investment company, which presented a return of 28%, and on the other hand, the car rental company the runner Its stock has fallen by 65% this year. Some of the stocks in the previous list continue to be recommended by Barron’s this year as well.
This is the current list:
Alibaba
The online commerce giant that originates from China was first issued in 2014 and is currently traded on the New York Stock Exchange according to a market value of approximately 203 billion dollars, after a 12.1% increase in the share price from the beginning of 2024 (which came after a negative return in 2023, which returned the value of the company to its value at the issue) . According to Yahoo Finance data, a large majority of the analysts who cover the stock are positive towards it, a small part of them are neutral and there are no analysts who have negative recommendations. The average target price per share reflects a 42% premium over the current price in New York.
Barron’s writes that this is probably the cheapest stock in the fields of online commerce and the cloud, and trades at a multiple of only 10 on the expected revenues this year, compared to a multiple of 45 for Amazon. Alibaba also has cash balances that make up about a quarter of the company’s value.
Alphabet (Google)
like Alibaba the technology company Alphabet also remains on the recommended list, and it is also the only representative of the “Magnificent Seven” (the technology giants that “carried” the market up in the last two years, which include, apart from Alphabet, the Amazon , dark , Meta , Microsoft , Nvidia andTesla ). Barron’s keeps it on the recommended list even though the stock is close to an all-time high, after a 38.2% increase this year.
Even in the case of Alphabet, there are no analysts who recommend selling the stock and most of them are positive towards it. The average target price they target is 8.4% higher than the current price on the Nasdaq. Barron’s mentions the dominant position of Alphabet (Google) in the field of search engines, but also the existing uncertainties – competition from AI and efforts by governments to split the company In their estimation, it will be able to handle these two clouds. They add that the investor Bill Ackman (who owns the stock) recently defined the company as “one of the businesses The best in the world.”
ASML
The chip company ASML According to Barron’s, it is one of the most critical companies for the chip industry. The company from the Netherlands specializes in lithographic machines that make it possible to produce high performance and more expensive chips. ASML is traded on Nasdaq with a value of 282 billion dollars. The stock actually fell in the past year by about 5%, contrary to the positive trend in the sector – according to Fidelity data based on S&P’s sectoral indices, chip stocks and chip equipment rose by almost 80% this year.
According to Barron’s, ASML has virtually no competition in its niche, and is the second largest European company after Germany’s SAP. ASML’s stock has been cut by about 20% in the past two months after it released disappointing reports, leading it to trade at a multiple of 28 on 2025 earnings – an attractive multiple for Barron’s. At the same time, the analysts’ target price reflects a 27% premium over the current price.
LVMH – Louis Vuitton
Another European stock on the recommended list is the luxury goods company LVMH (Louis Vuitton) which is also traded over the counter in the US at a value of 330 billion dollars. The owner of the company, Bernard Arnault, became the richest man in the world at a certain time last year. The company’s stock has dropped by 12% since the beginning of the year, but Barron’s believes in it and explains: “The world’s rich have never been richer, but the company has struggled to take advantage of this and its sales have remained unchanged since the beginning of the year, due to the weakness in China. This may change in 2025, which will lead to an increase in the stock, which will not happen today.”
Everest Group
company Everest Group provides reinsurance, and is traded in New York worth 15.5 billion dollars after recording a modest return of 3.3% since the beginning of the year. Barron’s believes that at a multiple of 6 on 2025 earnings, this is one of the cheapest stocks in the S&P 500, noting that such a value is often attributed to companies in trouble, but Everest is showing impressive growth. Most analysts are neutral on the stock, but no one recommends selling it, and the average target price is 18.3% higher than the current one.
Citigroup
The financial giant’s stock Citigroup is traded in New York at a value of 134 billion dollars, after generating a return of 43.2% since the beginning of the year. Barron’s notes the reorganization actions taken by CEO Jane Fraser that led to the focus of the bank. The return since the beginning of the year, the magazine says, is similar to that of the comparison group. They note that the bank has always underperformed, but in their estimation this may change. It seems that the analysts Agree, and most of them are positive about Citigroup shares and point to an average target price that is 13% higher than the current one.
modern
The biotech company modern rose to prominence during the Corona period, an epidemic for which it provided a vaccine. At its peak, in September 2021, the company’s value soared to more than 200 billion dollars compared to “only” 15.4 billion dollars now. Overcoming the pandemic led to a sharp decline in the stock and in the last year alone, Moderna has fallen almost 60%, the second highest decline in the S&P 500. According to Barron’s, unlike other biotech companies, Moderna has significant revenues, a diverse product pipeline and large cash balances. One problem they identify is its large spending ($4 billion a year) on research and development. In their estimation, it is possible that an activist investor will emerge who will push to reduce expenses, or that the company will become a target for acquisition.
Berkshire Hathaway
As mentioned, among the recommendations of Aaron’s is Warren Buffett’s holding company and its management. They believe that Buffett made several mistakes this year – including reducing his holding in Apple, which left $30 billion on the table and created a tax liability for Berkshire. However, they estimate that with $310 billion in cash (the highest amount held by any American company), Berkshire is the most defensive giant company today.
Two other stocks close the list: the transportation services app Uber (zero return in the past year) and the oil and gas company SLB (a decrease of 25%).
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