Hello, Reader.
The legendary investor Peter Lynch once said, “Know what you own, and why you own it.”
You see, building and protecting your wealth isn’t just about picking stocks – it’s about understanding the core strengths of the companies you invest in.
So, as we start the New Year, I want to share three companies that I consider to be promising investments in 2025…
And why.
Then, to further ring in your New Year right, I’ll share how you can set yourself up for success in 2025 with an exciting new AI opportunity.
Let’s get started…
Three Stocks for 2025
No. 1
My first stock may not be a household name here in the United States, but the company is well known in every South Korean household, and is that country’s go-to provider of Amazon-like services.
The company’s founder, Bom Suk Kim, dropped out of Harvard Business School 14 years ago to return to Korea and launch his Amazon wannabe.
This ambition did not come cheap. He raised billions of investment dollars from venture capital firms like Softbank Group and Sequoia Capital to build an end-to-end e-commerce and logistics infrastructure throughout South Korea.
In 2015, SoftBank invested $1 billion in Kim’s start-up, which made it Korea’s first “unicorn” – i.e., a young privately held company worth more than $1 billion. SoftBank injected another $2 billion in late 2018.
Thanks to early investments like these, Coupang Inc. (CPNG) has become the dominant e-commerce retailer in South Korea. Its core business, Rocket Delivery, delivers 99% of its orders within 24 hours. This service also offers same-day delivery for many products.
In addition, the company runs a takeout delivery business called Coupang Eats and an online grocery delivery business called Rocket Fresh.
Even though Rocket Fresh has already become Korea’s largest online grocer, it continues to grow rapidly. In the first quarter of fiscal year 2024, its delivery volume surged 70% year-over-year.
The company also provides a range of ancillary services, like Coupang Play, which allows customers to live-stream movies and sporting events, and Coupang Pay, which provides seamless payment processing across all Coupang services.
Coupang has been growing rapidly over the last several years, as it has expanded its dominance and improved its profitability. I expect its share price to post solid market-beating gains for many years.
No. 2
My next stock for 2025 is a titan of the digital payments industry.
The company traces its history to the year 2000, when Elon Musk merged his online bank, X.com, with Peter Thiel’s software company, Confinity. The merged entity started spinning gold almost immediately for Musk and Thiel, as the inventive pair sold the company to eBay Inc. (EBAY) just two years later for $1.5 billion.
Then in 2015, eBay spun it out as a separately traded company, which it has remained ever since. (Interestingly, 2015 was also the year that Musk and Thiel partnered up again to form OpenAI, the company that would go on to create ChatGPT, launching the AI Revolution.)
During the last several years, the tally of active accounts on this company’s platform has swelled to 429 million, while the annual volume of processed payments on comes in at a whopping $1.5 trillion.
PayPal Holdings Inc’s. (PYPL) dominant position in the “branded checkout” segment has powered most of that growth. The “PayPal/Venmo” checkout button you might see when shopping online is an example of that business. Seventy-five percent of the top 1,500 retailers in North America and Europe feature PayPal in their digital wallets.
But PayPal is not taking its success for granted.
The company is fortifying its market leadership by integrating leading-edge AI and machine-learning processes into key aspects of its operations. For example, the company uses AI to detect fraudulent transactions and to boost the approval rate of valid transactions.
PayPal is a leader in the financial technology world right now… and it will remain a long-term value buy for years to come.
No. 3
Although the upgrade cycle from legacy PCs to AI PCs is underway, it is just getting started. That’s because most AI PC models are so new that they are not yet for sale in the marketplace.
Once this new AI hardware finally arrives, it will require AI software as well.
First-movers like Dell Technologies Inc. (DELL) have had an advantage in their access to AI chips. In fact, Dell has begun using Nvidia Corp.’s (NVDA)Blackwell GPUs.
However, the second-movers of the AI PC upgrade cycle should also profit handsomely, as the cycle gains momentum and their product offerings come to market.
One of those second movers is HP Inc. (HPQ).
PC sales have been fairly dismal for most of the last few years. Unit shipments fell 16.6% in 2022 and another 13.8% in 2023. But in the final quarter of 2023, sales inched 3.3% higher.
IT research firm Canalys believes this modest uptick is a sign of things to come. It expects the personal computer market in the U.S. to grow about 10% in 2025, thanks to the coming AI PC boom and the transition to Windows 11.
By reputation, HP is an “old school” PC and peripherals company. Enterprise and consumer PCs account for about two-thirds of total revenues, while printers and printing supplies account for the other third.
Even though the company remains a technological leader, its stock does not receive the same level of affection from investors as stocks like DELL do. Both companies sell a nearly identical number of PCs per year – about 53 million.
And yet, Dell’s $87 billion market cap is nearly triple HP’s. This striking disconnect is presenting a buying opportunity.
As HP begins capitalizing on its second-mover status by shipping its AI PC offerings, its single-digit multiple should begin to expand into double digits.
Fortifying Your Portfolio in 2025
These three stocks are sure to fortify your portfolio in 2025. You can read the full details of these companies – along with four more stocks I like – in my free special report 7 Stocks for 2025.
Now, these companies aren’t the only ones that I believe will find success in the year ahead. I would be remiss if I didn’t mention the potential winners from the biggest megatrend of the last few years: AI.
My InvestorPlace colleagues Louis Navellier, Luke Lango, and I recently put our heads together and told folks about our brand-new AI Appliers Portfolio during a special broadcast. The portfolio is made up of stocks that could skyrocket from AI Day One.
AI Day One will be a “phase shift” in artificial intelligence. Without getting too into the weeds, it will involve the development of AI with much deeper, deliberate reasoning abilities.
And it will make it much easier for companies – high tech and not – to apply AI to their business models and create huge efficiencies… and profits.
Now, this new opportunity before AI Day One is so fast moving that things can change quickly. The reality is that we don’t know exactly what the world will look like in a year or two… but we do know that AI is moving faster than anything before it.
That is why it is important that you prepare yourself now.
So, to learn more about our handpicked favorite AI stocks, I invite you watch our special broadcast.
Regards,
Eric Fry
Editor, Smart Money
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