Investing Pros Eye 2025 Rebound for These Stock-Market Losers

As 2024 draws to a close, investors are looking ahead to 2025, seeking opportunities among this year’s stock market losers that could transform into stock winners in the new year. These underperformers, identified by Trivariate Research and Evercore ISI, boast potential turnarounds fueled by strategic changes and market conditions. Let’s take a detailed look at five promising candidates poised to rebound next year.

1. First Solar: Powered by Renewable Energy Potential
First Solar struggled in 2024, gaining only 8%, significantly underperforming the broader market. Concerns over the Inflation Reduction Act's future under the next administration dented investor confidence, as renewable energy tax credits were put in question. Since the election outcome, the stock has fallen over 13%, raising doubts about its growth trajectory.

Despite these challenges, First Solar remains a strong contender for a comeback. With a forward price-to-earnings (P/E) ratio of 9 and an average price target suggesting a 47% upside, analysts are optimistic. Its expanding market share in solar technology and increasing demand for renewable energy worldwide are compelling reasons to consider this stock for 2025. Additionally, 34 of 41 analysts on Wall Street rate First Solar as a buy or strong buy, underscoring its potential.

2. Nike: Poised for a Turnaround
Nike faced a difficult 2024, with pressures on margins and mixed investor sentiment. Analysts described the company’s recent performance as being at a “critical crossroads,” with its earnings guidance falling short of expectations. This has resulted in the stock trading at one of its lowest valuation multiples in years.

However, there’s hope for a reversal. Evercore analysts highlight Nike’s strategic pivot to strengthen its core business and improve operational efficiency. They project that by mid-2025, the company’s fundamentals could bottom out, leading to normalized margins and a recovery in valuation. If these strategies bear fruit, Nike could see significant upside in the new year.

Beyond operational changes, Nike’s global brand strength remains unparalleled. Any improvements in consumer demand or cost structures would likely translate into a stock recovery. The company’s ability to adapt to changing market trends will be pivotal in determining its 2025 performance.

3. Expedia: Travel Trends Revive Growth
Expedia’s performance in 2024 has been a mix of progress and challenges. The stock gained 24% year to date, but many analysts adopted a neutral stance, reflecting uncertainty about the company’s long-term trajectory. Travel demand in the U.S. market has shown steady improvement, prompting Bank of America to upgrade Expedia from neutral to buy.

The company’s forward P/E ratio of 13.4 and its strategic focus on enhancing user experience are notable factors for its potential rebound. Additionally, the travel sector’s recovery is expected to gain momentum in 2025, further boosting Expedia’s prospects. The stock’s ability to maintain growth while navigating competition will likely play a key role in its turnaround.

4. ZoomInfo Technologies: Revitalizing Software Demand
ZoomInfo struggled in 2024 amid sector-wide slowdowns in software demand. The stock’s low momentum and high volatility created challenges for investors, yet these very traits could position it for a strong comeback. Analysts believe the company’s strategic realignment efforts and a likely recovery in tech spending could drive growth.

ZoomInfo’s focus on expanding its market share through innovation and efficiency improvements gives it a competitive edge. The company has invested heavily in refining its products to meet evolving customer needs, positioning it well for when demand picks up in 2025. Analysts consider it a high-risk, high-reward opportunity for investors willing to take calculated risks.

5. Avis Budget: Driven by Fleet Optimizations
Avis Budget faced headwinds in 2024, but strategic fleet management and cost optimization measures have positioned it for a potential turnaround. As travel demand continues to recover, the car rental giant is expected to benefit from increased bookings and improved operational efficiency.

Avis Budget’s ability to adapt to changing travel patterns has been a key factor in its resilience. The company’s forward P/E ratio and consistent investments in technology to streamline operations signal a positive outlook. Additionally, inflationary pressures are expected to ease in 2025, further supporting the company’s growth trajectory.

By Barbara Kollmeyer
Evercore flags Nike, ZoomInfo and other 'tax-loss targets'
The days left to trade in 2024 can now be counted on one hand, and with Christmas and the start of Hanukkah falling in the same week this year, investor ranks should start thinning out. Looking ahead to 2025 is a team of Evercore ISI strategists led by Julian Emanuel, who in our call of the day, offer up some stocks which lost ground in 2024 but which could be see a rebound in the new year.
Emanuel and his team looked at tax-loss selling, which happens at the end of the year as investors unload their biggest-losing stocks to offset capital gains. "Tax Loss Targets" - stocks down 20%+ YTD [year to date], down 50%+ since end 2021 and which have yet to make new all-time highs since12/31/21 - are tax loss candidates that could see momentum improve after the New Year," Emanuel writes in a note to clients.
He and his team believe small-capitalization stocks in particular could benefit, with the Russell 2000 RUT lagging behind its peers since 2022, up just 10.6% year to date versus 24% for the S&P 500 index SPX. Those smaller stocks make up most of the tax loss candidates for 2024, they note.
The advantage for Russell stocks is that smaller and low momentum stocks tend to outperform in January and the group as a whole is still trading at a below-average premium to the S&P 500 and may benefit from "a Fed which still maintains an easing bias," said Emanuel.
While small-caps could see a big benefit, they pick stocks from across the Russell 3000 RUA - large-cap, midcap and small-cap U.S. equities - with 45% of that group down year to date against a 23% rise for the index overall.
They flag Nike (NKE) in particular (Evercore rates it outperform ) as at a "critical crossroads," after its recent outlook. Evercore analyst Michael Binetti believes Nike bought time with its guidance cut and gave itself earnings per share flexibility to jump-start a turnaround.
And "any sign fundamentals could bottom in mid 2025 would result in the stock starting to trade on normalized margins and a recovery multiple," said Binetti.
Other names Evercore flags - ZoomInfo Technologies (ZI), Avis Budget (CAR), Cleveland-Cliffs (CLF) and StoneCo (STNE) - all unrated by the analysts, but part of the "low momentum, fresh starts" stock list.
Here's their complete screen of tax-loss losers poised to bounce:
The last word goes to MarketWatch's Mark Hulbert, who recently wrote about how investors selling tax losers can miss out on any bounce that could be coming. Check out his workaround.
Opinion: Year-end selling is hitting these 7 stocks. How their tax loss can be your gain.
The markets
The Nasdaq Composite COMP is rising in early trade, with smaller gains for the S&P 500 SPX, but the Dow industrials DJIA are struggling, following Friday's action that saw a rebound for all three indexes, though losses for the week.
Key asset performance Last 5d 1m YTD 1y S&P 500 5930.85 -1.99% -0.64% 24.34% 24.74% Nasdaq Composite 19,572.60 -1.78% 2.99% 30.39% 30.55% 10-year Treasury 4.527 12.20 24.80 64.61 63.02 Gold 2645.1 -0.94% 0.71% 27.67% 28.12% Oil 69.79 -1.20% 1.03% -2.16% -5.03% Data: MarketWatch. Treasury yields change expressed in basis points
Read: Wall Street's 'Santa Claus rally' window is about to open with the Dow down in December
The buzz
Honda (JP:7267) and Nissan (JP:7201) have officially announced that they're in talks for a merger, following reports of discussions last week. Honda also said it would buy back as much as $7 billion worth of shares, and its U.S.-listed shares are soaring.
Video platform Rumble stock (RUM) is climbing 45% after Friday news of a $775 million investment from influential crypto giant Tether.
Novo Nordisk shares (NVO) are rebounding after Friday's big selloff. One analyst says the stock drop linked to disappointing results from a trial of the drugmaker's new