3 Falling Angel Stocks Primed for a 2025 Comeback
2min read Despite the roaring bull market in U.S. equities this year, not all investors have shared in the gains. About one-third of publicly traded companies posted negative returns in 2024. Among these are a few fallen angels — stocks with strong fundamentals that could outperform the broader market in 2025. Let's dive into three such opportunities.
1. AMD: Poised for a Data-Centric Rebound
Advanced Micro Devices (AMD) has struggled to shine in the shadow of Nvidia's dominance during the AI boom. While Nvidia captured the spotlight, AMD's stock delivered negative returns in 2024 despite solid business performance.
In its latest quarter, AMD's data center segment delivered a 122% revenue increase, generating $3.5 billion — over half of its $6.8 billion total revenue. AMD's overall revenue rose 22% year-over-year, marking its strongest growth in two years. Analysts anticipate a continued slowdown in some AI-related areas, but forecast 27% revenue growth for AMD in 2025.
AMD's profitability is also surging, more than doubling in the last quarter. Despite trading at 26 times forward earnings, its robust growth trajectory could justify the valuation. If AMD sustains 20%+ annual growth over the next two years, it may emerge as a bargain at current levels.
2. Comcast: Hidden Catalysts in Entertainment and Connectivity
Comcast faced a challenging year, with shares falling 10% amid accelerated customer attrition in its Xfinity cable division. While the cord-cutting trend is well-known, the broadband business, once a reliable revenue stream, has encountered new headwinds, including hurricanes and competition from wireless carriers offering cheaper alternatives.
However, Comcast has promising growth catalysts:
Entertainment: The success of its film Wicked, one of 2024's highest-grossing movies, is set to continue with part two arriving in late 2025. Analysts project the company could add another $5 billion from its entertainment division next year.
Theme Parks: The much-anticipated Epic Universe theme park is slated to open in May 2025, potentially boosting the revenue share of Comcast's attractions business, currently a smaller contributor.
Dividends: Comcast offers a nearly 3% dividend yield, with consistent increases since 2008.
These factors position Comcast for a turnaround in 2025, even as the company adapts to shifting market dynamics.
3. Realty Income: A REIT Ready for a Comeback
Realty Income (NYSE: O) has been a disappointment for investors over the past two years, and 2024 continued the trend with further declines. However, pessimism may have gone too far, as the Federal Reserve's rate-cut cycle is expected to revitalize the real estate sector.
This well-diversified REIT, managing 15,457 properties across 90 industries, focuses on high-quality, recession-resistant tenants. By the end of September, it maintained an impressive 98.7% occupancy rate.
Additional strengths include:
Dividend Growth: Realty Income has delivered 108 consecutive quarters of rising dividends. Its 5.6% yield, which started the year only marginally higher than top money market funds, has become far more appealing with falling interest rates.
Future Earnings: Management expects a 5% increase in adjusted funds from operations (AFFO) for 2025, signaling continued dividend growth.
For income-focused investors, Realty Income offers stability and attractive returns as economic conditions shift in its favor.
Conclusion
Fallen angels like AMD, Comcast, and Realty Income present compelling recovery stories backed by robust fundamentals and significant growth catalysts. As market dynamics evolve, these stocks could stage a strong comeback in 2025, rewarding patient investors. Keep an eye on these names as the new year approaches.
