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Fidelity unveils stocks to target for the rest of 2025
Silin Chen
Wed, January 29, 2025 at
11:03 AM EST
In This Article:
Tech stocks have always been a playground for
dreamers and believers, but the recent breakout of the Chinese artificial
intelligence company DeepSeek just shook up Nasdaq.
DeepSeek claims that its flagship AI model, R1, can
perform as well as costly models like OpenAI more cheaply and requiring fewer
resources.
This has hurt major AI players, led by chip maker
Nvidia, as it threatens the demand for the wide-margin high-end
graphics-processing units, which have been a key driver of chipmakers'
AI-focused revenue growth.
Last year, the S&P 500 gained 23% on the back of
a tech-fueled rally driven by lower interest rates and strong earnings.
But risks such as rising oil prices, potential
tariffs from the Trump administration, and global instability threaten to challenge
the market’s momentum in 2025, Fidelity warns.
Now, as uncertainties on AI’s growth path rise,
investors are exploring opportunities across sectors.
Fidelity has released a stock screen highlighting top growth, value and income
stocks that could win in 2025.
Despite a
10% decline in 2024, PepsiCo remains a dividend king, boasting more than 50
consecutive years of dividend increases.Bloomberg/Getty Images
Growth
stocks keep the momentum
Growth stocks led by tech have outperformed value
stocks for more than a decade and by a relatively wide margin, except for the
pandemic period, Fidelity said.
Fidelity’s top picks for the growth sector sorted by
market cap include Nvidia (NVDA)
, Amazon (AMZN)
, Meta Platforms (META)
, Alphabet (GOOGL)
, Broadcom (AVGO)
, Mastercard (MA)
, Netflix (NFLX)
, T-Mobile US (TMUS)
, and ServiceNow (NOW)
.
These stocks have an expected earnings-per-share
growth rate of at least 15.7% over three to five years and a cash-flow growth
rate of at least 12.1% over five years.
Nvidia was one of last year’s biggest winners,
surging 170%. The company’s growth has been driven by the demand for its GPUs,
which power AI model training.
Related: Top analyst
revisits Nvidia stock price target amid DeepSeek threat
The launch of DeepSeek models could hurt Nvidia, as
margins on GPUs could be pressured. Still, several analysts have defended AI
stocks. Investment firm Wedbush views the selloff as a "golden buying
opportunity."
"There is only one chip company in the world
launching autonomous, robotics, and broader AI use cases, and that is
Nvidia," said Wedbush analyst Daniel Ives.
Bernstein has reiterated its outperform ratings on
Nvidia, with a $175 price target, and Broadcom, with a $220 target, saying it
continues to like those names within the U.S. semiconductor sector.
Amazon climbed 44% in 2024, driven largely by the
growth of Amazon Web Services, its cloud-computing division. The company is building
chips to give itself a cheaper alternative to Nvidia's equipment.
Meta Platforms also had a standout year, with its
stock up 65%. The company is ramping up its AI investments to improve its
generative AI advertising tools. Advertising accounted for 98.3% of Meta’s
total revenue in the third quarter.
Meta is set to post its Q4 earnings on Jan. 29 after
the market close, while Amazon will release financials next week.
Affordable
opportunities among value stocks
Value stocks also feature prominently in Fidelity’s
screen as they appeal to those looking for relatively stable and reasonably
priced options.
The stock picks, featuring traditional automakers,
banks and energy-focused companies, include Shell SHEL, Total Energies TTE,
Banco Santander SAN, General Motors (GM) , Petroleo Brasileiro (PBR) , Honda Motor (HMC) , Ford Motor (F)
, Deutsche Bank (DB)
, Vale (VALE)
, and Bayer (BAYRY)
.
These picks all have low price-to-earnings
multiples, ranging from 0 to 9.3 based on next year’s earnings estimates.
Last year, General Motors saw its stock rise nearly
50%, significantly outpacing the broader market. The company just posted its Q4
results, beating Wall Street’s expectations for the quarter.
Related: General Motors’
robotaxi exit is a massive hit for tech leader
The company sold 2.7 million cars in the U.S. in
2024, up 4% from 2023. It's the highest sales volume since 2019.
GM also maintained a positive outlook on electric
vehicles. The company expects to build 300,000 EVs in 2025, a nearly 60%
increase from last year.
But there are still uncertainties ahead under the
Trump administration, such as potential tariffs that could drive up costs for
automakers. (GM shares fell almost 9% on Jan. 28.)
Looking
for dividends? Look to income stocks
Income is another strategy for investors seeking stable
returns. This strategy features stocks with strong dividend yields and
consistent dividend growth.
Since early 2022 (when interest rates were much
lower) stock yields have struggled to compete with higher-yielding investments.
"But rates came down in 2024 and more cuts are expected in 2025,"
Fidelity said. That could "further even out the field when comparing stock
yields with other investments that generate income," the mutual-fund giant
said.
Here are 10 stocks from Fidelity’s screen for income
seekers. They offer dividend yields of 3.5% or higher and a five-year average
dividend growth rate of at least 5.9%:
AbbVie (ABBV) , Chevron (CVX) , Nestle SA (NSRGY) , PepsiCo (PEP) , Bristol-Myers Squibb (BMY) , United Parcel Service (UPS) , Toronto-Dominion Bank (TD) , Bank of Montreal (BMO) , Equinor (EQNR) , Canadian Natural Resources (CNQ) .
Among the 10 stocks mentioned above, only AbbVie and
Bristol-Myers Squibb saw their stocks rise in 2024.
(As with any of these informative articles,
anyone who needs someone to talk to about
this
very subject contact me and I can direct you to a knowledgeable advisor).
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