#39 - 5 Stocks to Watch in 2025

Author

Graham Schroeder
January 03, 2025

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Your home base for investing, finance, personal growth.

Happy New Year to you all! This week we recap the public Freedom Fund’s 2024 growth and my Top 5 stock picks for 2025.

Market Recap

  • U.S. Stocks Soared in 2024

    • The S&P 500 experienced a stellar 23% gain in 2024, marking the best two-year consecutive performance since 1997-1998. Driven by a healthy U.S. economy, declining inflation, and a significant AI-powered rally in technology stocks, with 57 record closes during the year.

    • Mag 7 companies contributed over 53% of the S&P 500’s return, other sectors like financials (+28%), utilities (+20%), and industrials (+16%) also delivered strong performances.

    • Investors remain optimistic about future growth due to a resilient economy paired with Federal Reserve rate cuts, but high valuations, slower rate reductions, and elevated borrowing costs slow expectations for another blockbuster year.

  • Mortgage Rates Start 2025 Near 7%

    • The average 30-year fixed mortgage rate increased to 6.91% at the start of 2025. The highest level since July, while 15-year rates rose to 6.13%. Elevated rates continue to pressure housing affordability.

    • Despite affordability challenges, housing contract signings rose in November, signaling some buyers are proceeding with purchases amid limited inventory.

    • Mortgage applications dropped significantly in late December due to holiday seasonality with purchase applications down 13% and refinancing applications falling 36%.

  • Gold Sees Biggest Annual Gain Since 2010

    • Gold prices surged over 27% in 2024, outpacing the S&P 500’s 23% gain. This growth was fueled by Federal Reserve rate cuts and increased gold purchases by foreign central banks.

    • Analysts from JPMorgan and Goldman Sachs forecast gold prices to approach $3,000 per ounce by the end of 2025, supported by hedging demand against economic uncertainty and geopolitical risks.

    • Lower interest rates and potential inflationary pressures are expected to attract U.S. retail investors to gold in 2025, adding to its upward momentum.

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2024 Freedom Fund Portfolio Recap

When I started the Gazette this past April and made the decision to create a public brokerage account that was just a bit over $11,000 I wanted to share real-time buys, sells, and portfolio updates to help me to connect with readers in a meaningful way and provide insights into the thought process behind every investing decision. My goal is to inspire and educate others on building long-term wealth while learning from both successes and setbacks. By opening the Freedom Fund to the public, I hoped to create a space where readers can grow alongside me in confidence and collaboration as investors. Below is a big picture of where things finished at year end:

  • Portfolio Value: $25,149.01

  • Total Return Since Inception (Including Dividends): 22.71%

  • 2024 Dividends Reinvested: $524.37

  • 2024 Top Position Returns:

    • $PLTR - Palantir Technologies - 118.71%

    • $SHOP - Shopify - 54.03%

    • $AXP - American Express - 43.06%

  • New Position - $SOFI - SoFi Technologies

    • SoFi has been a company on my radar in 2024 that I finally decided to pull the trigger on and add it to the portfolio.

    • The company has seen a +30% customer growth YOY.

    • SoFi reported $61 million in net income for Q3 2024, marking its fourth consecutive profitable quarter and solidifying its position as a fintech leader.

    • SoFi has demonstrated its ability to grow across multiple services in banking, lending, investment products, and its Galileo technology platform.

Over the past year I have really tried to balance the portfolio with a blend of ETFs and individual stocks with exposure across various sectors such as technology, real estate, energy, and finance. This diversification not only reduces risk but also positions the portfolio to benefit from a range of market opportunities. By maintaining a balance between growth stocks, income-generating assets, and broad market ETFs, this portfolio is forming a strong foundation for sustained financial success in the future.

Keep in mind that the S&P 500 was up over 23.3% in 2024. So my portfolio didn’t even beat the S&P 500. Remember that when times are good you have to take advantage of what the market has to offer. And if you make the right plays you can even beat the index funds. However, true portfolio performances should be judged when times are turbulent.

Freedom Fund Background: I created the Freedom Fund as a public brokerage account back in October of 2022 to share that anyone with a social security # and a bank account can begin their investing journey by investing a couple hundred dollars a week. Every week and month I post on X (@GrahamInvesting) public updates about the purchases, exits, dividends, and growth of the fund if you want to follow in real time. The biggest obstacle people have to investing is just getting started so I decided to start a new account at $0 to start from nothing with you.

Top 5 Stocks To Watch in 2025

I expect 2025 to come with some turbulence with our ever changing geopolitical environment that is staring at us upon the horizon. This year I think the following 5 companies will be interesting stories to follow in terms of company and share price growth. Below is an overview of why 2025 could bring growth for the following companies:

  • Palantir had a banner year in 2024 up ~350%. Palantir's Foundry and Apollo platforms are increasingly being adopted for enterprise AI, with a strong focus on government and healthcare sectors.

  • Projected growth from expanding its commercial customer base and significant government contracts. If Palantir can maintain 30% revenue growth rates in 2025 the company has significant upside.

  • Achieved consistent profitability in 2024, signaling operational maturity and is beginning to build deep integration into healthcare data analytics that seems undervalued by the market.

  • With Palantir being deeply engrained in with the U.S. defense sector, Peter Thiel being in Trump & Vance’s back pocket, I expect plenty of opportunity and growth over the next 4 years. However, expect share price growth to scale back compared to 2024.

2. $BE (Bloom Energy)

  • Bloom Energy specializes in manufacturing fuel cells that generate electricity through a clean electrochemical process, providing efficient and reliable on-site power solutions for various industries. They are also a key player in hydrogen production and storage, addressing decarbonization goals.

  • The company reported a revenue of $330.4 million in Q3 2024, a 17.5% YOY decrease. Despite this, the gross margin improved to 23.8%.

  • An agreement was announced with American Electric Power (AEP) to supply up to 1 gigawatt of fuel cells for data centers.

  • Analysts forecast that Bloom Energy is on track to achieve profitability by 2025, with significant revenue growth anticipated from large-scale projects, including a partnership with SK Ecoplant to deploy an 80MW fuel cell power system in South Korea, expected to be operational in 2025.

  • SoFi Technologies, Inc. is a digital financial services company offering a range of products, including lending, financial services, and a technology platform. And is continuing its growth as a leading fintech disruptor with an ecosystem of banking, investing, and lending products.

  • In Q1 2024, SoFi reported net revenue of $645 million, marking its second consecutive quarter of GAAP profitability. By Q3 2024, the company achieved net income of $88 million, reflecting continued financial strength.

  • Their diversified business model and consistent profitability position it for potential growth going into 2025.

  • SoFi stands for "Social Finance," reflecting its origins in providing student loan refinancing and its mission to offer a community-oriented approach to personal finance. They actively target younger demographics, including Gen Z and Millennials, which could build a loyal base of the future earners of our world.

4. $GOOGL (Alphabet Inc.)

  • Many would think that Google at this point is a boring old stock that has peaked its potential. But in 2024 Alphabet proved to be leading advancements in AI with tools like Bard and integration across its ecosystem, driving advertising and cloud revenue. The company continues to build monetization through ads and YouTube Premium subscriptions. The conglomerate has such strong free cash flow that should continue to support innovation and strategic acquisitions.

  • In Q3 2024, Alphabet reported a 15% YOY increase in revenue reaching $88.3 billion primarily driven by strong performance in Google Services and a 35% surge in Google Cloud revenue.

  • Waymo, Alphabet's autonomous driving technology subsidiary, continues to make strides in self-driving technology. In 2024, Waymo expanded its autonomous ride-hailing services to new markets and increased its fleet size, positioning itself as a leader in the autonomous vehicle race.

  • Alphabet faces ongoing antitrust scrutiny, with potential implications for its business operations. These legal uncertainties may impact investor sentiment and stock performance in the near term which could create some buying opportunities.

  • Given our countries current mass shooting theme I expect an expanding market for touchless security solutions in high-traffic areas like schools, stadiums, and transportation hubs. The company is showing accelerating growth in recurring revenue through service contracts and new installations.

  • In Q2 2024, Evolv reported revenue of $25.5 million, a 29% increase year-over-year, reflecting strong demand for their security solutions. The company achieved an annual recurring revenue of $88.9 million in the same quarter, marking a 64% increase from the previous year, indicating robust subscription growth.

  • In October, Evolv initiated an internal investigation into certain sales practices that impacted revenue recognition and other financial metrics. This revealed that some sales were subject to extra-contractual terms and conditions not disclosed to accounting personnel, leading to premature or incorrect revenue recognition estimated between $4 million to $6 million through June 2024.

  • As a result, Evolv's CFO resigned, and four other employees from the accounting, sales, and finance departments departed. The company has undertaken remedial actions and hired an advisory firm to provide interim finance and accounting resources.

  • Evolv is an early-stage company with the potential for significant market realization as adoption increases. While the company navigates internal challenges, its continued customer growth indicates resilience and a sustained demand for its innovative security solutions.

The purpose of this newsletter is to encourage you and our other 79 Gazette subscribers to start and stay consistent with your personal, professional, and financial journey.

Thanks for investing your time reading this.

Disclaimer: Graham’s Gazette provides information and resources related to investing, financial topics, and personal growth for educational and entertainment purposes only. The content presented is not intended to be construed as financial advice. Readers are encouraged to conduct their own research and consult with qualified professionals before making any financial decisions. Graham’s Gazette and its creators do not assume any responsibility for the accuracy or completeness of the information provided nor do they guarantee any specific results from such use of information.