Seeking Alpha has published my article: “10 Stocks For 2025”.

10 Stocks For 2025

Dec. 28, 2024 12:29 AM ETGOOG, AMZN, AAPL, BRK.A, META, MSFT, NVDA, OXY, UBER, VOO, BRK.B

David Kass

Summary

• The outlook for U.S. stocks in 2025 is bright due to expected interest rate cuts and stable unemployment, boosting equity prices.
• President-elect Trump’s tax cuts and deregulation plans should further stimulate equity prices, though tariffs could pose inflationary risks.
• Following Warren Buffett’s buy and hold strategy, I recommend the same 10 stocks for 2025, which outperformed the S&P 500 in 2024.
• Key stock picks include Alphabet, Amazon, Apple, Berkshire Hathaway, Meta Platforms, Microsoft, Nvidia, Occidental Petroleum, Uber Technologies, and Vanguard S&P 500 ETF.

The outlook for U.S. stocks in 2025 continues to be very bright as a result of the further likely decrease in interest rates by the Federal Reserve as its preferred measure of inflation, core PCE, has declined to 2.8%. In its Economic Projections released on December 18, 2024, it projects a further decline of this measure to 2.5% by yearend 2025. The Federal Funds rate, currently at 4 1/4% – 4 1/2% is projected to be reduced to 3 3/4% – 4.0% in 2025, representing two cuts in interest rates of 1/4% each. As Warren Buffett has stated: “Interest rates are to asset prices, as gravity is to matter.” Therefore, lower interest rates should result in higher equity prices. Furthermore, the Federal Reserve’s projected unemployment rate of 4.2% at year end 2024 is near a historically low level and is projected to increase to only 4.3% in 2025.

President-elect Donald Trump’s plans to renew the corporate and individual tax cuts that are scheduled to expire at the end of 2025 and reduce regulations should provide a further stimulus to equity prices. One cause for concern however, would be the extent that his threatened tariffs are implemented, which could have an inflationary impact and slowdown the growth of GDP.

Against this positive backdrop of declining interest rates, the outlook for equities both in the short run and the long run continues to be bright. The S&P 500 (with dividends included) has closed higher in over 80% of the 82 years since 1942 while achieving an average annual return of 10%.

Following the buy and hold strategy of Warren Buffett, I am recommending the same 10 stocks for 2025 as I did in 2024, in which an equal weighted portfolio increased by 42.3% as compared to 21.8% for the S&P 500. Furthermore, 8 of the 10 stocks rose in value, with only one declining and one being virtually unchanged.

My list of 10 stocks for 2025 (and their year-to-date performance):

Alphabet (GOOG): (+40.0% year-to-date) This tech giant should continue to dominate in digital advertising, grow its cloud computing business, and make advancements in artificial intelligence. However, it does face regulatory risk as a result of ongoing antitrust cases. Its forward P/E = 23.

Amazon (AMZN) (+49.4%): This company will be expanding its e-commerce, continue to dominate in cloud computing (AWS) and make investments in logistics and AI. Its forward P/E = 39.

Apple (AAPL) (+34.5%): Apple has an installed base of active devices of over two billion and has over one billion high margin subscriptions. Its planned introduction of AI on its next version of its iPhones should result in substantially boosting demand for this upgrade. Its forward P/E = 35.

Berkshire Hathaway (BRK.A) (BRK.B) (+26.7%): This extremely well-managed conglomerate has substantially outperformed the market over its 58-year history, with a compounded annual return of 20% per year as compared to 10% for the S&P 500. Its $300 billion cash has positioned the company to be able to take advantage of the next major market decline. Its forward P/E = 24.

Meta Platforms (META) (+70.5%): This company operates the world’s leading social network, Facebook, with 3 billion monthly active users out of a total world population of 8 billion. it also owns Instagram, WhatsApp, and Messenger. Strong growth in revenues and earnings is projected over the next few years. Its forward P/E = 25.

Microsoft (MSFT) (+16.5%): This company is the largest independent maker of software. Its cloud services segment is very large and growing rapidly. It is taking a major leadership role in AI. Its forward P/E = 33.

Nvidia (NVDA) (+182.6%): This company is a leading developer of computing platforms that utilize its processing units and software for applications that include generative artificial intelligence. It has a very high projected growth rate in revenues and profits. Its forward P/E = 36.

Occidental Petroleum (OXY) (-19.3%): This company is strongly positioned in U.S. shale production and carbon capture technology. Its forward P/E = 16.

Uber Technologies (UBER) (0.0%): This company is strongly positioned in ride-sharing and food delivery. Its forward P/E = 29

Vanguard S&P 500 ETF (VOO): The S&P 500 (with dividends included) (+21.8%) has closed higher in over 80% of the 82 years since 1942 while achieving an average annual return of 10%. Only 15% of actively managed mutual funds outperform the S&P 500 over a 5 – 10 year period. Warren Buffett has instructed the trustee of his wife’s inheritance to put 90% of it into a low-cost S&P 500 index Fund (and the rest in short-term government bonds). Its forward P/E = 22.