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Wolfe provides a "stock-picking guide" for the S&P 500, highlighting 15 components with at least 25% revenue growth this year.

AInvestWednesday, Jan 8, 2025 2:20 am ET
1min read

Intelligible Finance learned that Wolfe Research strategists still believe growth stocks will outperform the broader market in 2025 and listed stocks with revenue expected to grow at least 25% this year. In a recent report, the strategists said they prefer cyclical and growth stocks over high-quality and value stocks; and small- and mid-cap stocks over large-cap stocks. They expect the seven tech giants - Apple (AAPL.US), Microsoft (MSFT.US), Alphabet (GOOGL.US), Amazon (AMZN.US), Nvidia (NVDA.US), Meta (META.US) and Tesla (TSLA.US) - to outperform other components of the S&P 500.Wolfe Research chief investment strategist Chris Senyek said: "We still believe the solid fundamentals and increased AI spending will drive their outperformance again this year."In addition, the strategists said they expect revenue growth of more than 25% in the Information Technology (XLK.US), Energy (XLE.US) and Communication Services (XLC.US) sectors in 2025, up 46%, 32% and 26% respectively. In contrast, Wolfe analysts said revenue growth for the Consumer Staples (XLP.US) sector is not expected to be significant; revenue growth for the Utilities sector is only 6%, while that for the Materials sector (XLB.US) is 7%.They also forecast 2.5% real GDP growth in the US in 2025 and 2026, compared with an average forecast of 2%-2.1% from Wall Street economists. He believes the market concentration will remain at a high level in 2025 as long as the US does not fall into a recession or the expected AI spending does not change significantly.Senyek said: "Economic surprises are picking up, and we think this momentum will continue as we expect both consumer and business confidence to rise as regulations are relaxed across industries, tax cuts are extended, and there may be modest additional tax cuts starting in 2026."In addition, Wolfe analysts said they believe the weak performance of the stock market in December was a "technical sell-off as investors may have sold to lock in gains from the previous year."Below are the stocks Wolfe Research analysts believe will have revenue growth of at least 25% in 2025 among the S&P 500 components:[Insert image here]

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