The Seven Stocks Set to Crush the Market in 2025

What if I told you that there are seven stocks hiding in plain sight, ready to dominate the market in 2025? Now, if you’ve been watching this channel, you’d probably say, “Paul, we don’t know what’s going to happen in the short run.” And you’d be absolutely right. But here’s the kicker: one of these seven stocks is already up 70% this year in just seven weeks. These aren’t hype-driven plays; they’re wildly undervalued businesses with serious long-term potential.

But I’m not just throwing out stock picks and walking away. We’re going to track these stocks quarter by quarter, directly comparing their performance against the Magnificent 7 (Mag 7) and the broader market. This isn’t just a prediction—it’s a challenge. Every three months, I’ll update you on how these under-the-radar picks are stacking up. Are they beating the giants? Are they lagging behind? No hype, just results.

And to be fully transparent—I own every single one of these stocks as part of my 26-stock portfolio. Right now, we’ve got a high of 70%, a low of -16%, and a lot in between. If they were equally weighted, we'd be up overall. But again, short-term results mean nothing.

How Do They Compare to the Mag 7?

Now, let’s talk about the actual Mag 7. Their performance this year? Between 16.74% and 16.5%. Basically, they’ve canceled themselves out and are actually down a bit overall. Meanwhile, the S&P 500 is up about 2.5% year-to-date. Surprised? You shouldn’t be.

And let’s look deeper. I ran my stocks through our Eight Pillar Portfolio analysis. The results? Not great. Four check marks, four Xs. Cash flows are down, net income is down. But check this out: they’re trading at 21x free cash flow. With share buybacks at 4.2%, the valuations still look solid.

Now, compare that to the actual Mag 7. They get six check marks, two Xs. But those Xs? 62.5x free cash flow and 55x net income over the past five years. That means they are three times more expensive than my picks.

Remember, one of the core investing principles we follow is that a great story can become a terrible investment if you pay the wrong price. The Mag 7 are three times more expensive in terms of free cash flow compared to my picks. If you had the choice between paying one times free cash flow on my stocks or three times on the Mag 7, what would you do? If you think price doesn’t matter, this isn’t the channel for you. If you know price matters—or want to learn why—stick around.

Stock #1: Sprouts Farmers Market ($SFM)

Sprouts has been on fire, hitting an all-time high of $179 before falling back to $140. But short-term price action isn’t what I care about. Here’s what matters:

• Profit margins: Nearly 5% and growing.
• Smaller, more efficient stores: Higher sales per square foot and better margins.
• Private label growth: Sprouts’ own brand has 50-60% gross margins, compared to their overall 38%.
• Expansion potential: Currently at ~400 stores, with room to grow to 1,200-1,350.

The only red flag? Valuation. At 46x free cash flow over five years and 35x last year, it’s a bit rich. So, while I’m holding, I’m not adding more.

Stock #2: Southwest Airlines ($LUV)

The biggest concern here? It’s an airline. But here’s the reason it’s different:

• Pre-COVID profit streak: 47 consecutive years of profitability.
• Cost discipline: Only flies 737s, which simplifies maintenance and operations.
• Strong brand loyalty: No baggage fees, elite rewards program.

If Southwest can just get back to an 8% profit margin (they were at 10-15% pre-COVID), this stock should be worth $67. As long as they stick to their strengths, this could be a long-term winner.

Stock #3: PayPal ($PYPL)

PayPal has gone from fintech darling to investor headache. But that’s a mistake.

• Stock was $310 in 2021, now massively discounted.
• Free cash flow monster: $6.8B last year vs. $4.1B in net income.
• Processing power: Over $1.5 trillion annually with 400M users and 200M merchants.
• Valuation: 11x free cash flow, with aggressive buybacks.

They’re expanding Venmo and innovating with new payment solutions. This is an undervalued compounder hiding in plain sight.

Stock #4: Adobe ($ADBE)

Many people think AI will destroy Adobe. I think AI makes Adobe even stronger.

• Market dominance: 90% share in digital creativity.
• High switching costs: Once you use Adobe, you don’t leave.
• Massive margins: 40% operating margin, nearly 90% gross margins.

Adobe is embedding AI into its tools (Firefly, Sensei), giving it even more pricing power. Despite the fear, analysts project double-digit growth in revenue and earnings for years.

Stock #5: Alibaba ($BABA)

Up 70% this year. Still a long-term bargain.

• China e-commerce leader trading at dirt-cheap valuations.
• Margins crush Amazon: 25% EBITDA margins vs. Amazon’s 5%.
• Cloud growth: 35% market share in China, with penetration under 10%.
• Massive cash stockpile: $80B in cash, $25B buyback program.

Despite geopolitical fears, the long-term upside is undeniable.

Stock #6: Ulta Beauty ($ULTA)

The beauty industry never goes out of style, and Ulta is the undisputed leader.

• $100B+ U.S. beauty industry, with Ulta dominating.
• 40M loyalty members, 1,300+ locations.
• High-margin private labels and e-commerce expansion.

Retail is tough, but Ulta is positioning itself for long-term success through exclusive brand partnerships, AI-driven marketing, and a strong customer experience.

Stock #7: Nike ($NKE)

Nike has been beaten down, but they aren’t just leading—they’re redefining the game.

• 40% market share in global athletic footwear.
• Direct-to-consumer now 40%+ of revenue, driving higher margins.
• Massive expansion into women’s apparel and emerging markets.
• Consistent free cash flow and aggressive buybacks.

At $80 per share, Nike is far off its $180 highs. But the long-term outlook is incredible, with revenue projected to exceed $60B by 2030.

Final Thoughts

Any one of these stocks could do anything in the short term. You’ll never buy at the bottom. But if you’re still reading, you’re serious about investing the right way—finding great stocks before the crowd, analyzing financials properly, and building a portfolio that compounds over time.

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