Top 5 Stocks to Watch in 2025

In the past year, we managed to snag two of the five stocks from our 2025 "stocks to buy" list at prices we felt comfortable with. Mo picked up Google, while I added Nike to my portfolio. Now, as we step into a new year, it's time to explore the five stocks I'm eyeing for 2025 and the target prices at which I'd consider buying them.

Before diving into the list, it's worth noting that the market had a strong year. Every company on our previous list, except Nike, ended the year in positive territory. But remember, as principal-driven investors, we don’t judge the correctness of our decisions solely by short-term price movements. Instead, we focus on fundamentals. So, let's kick off with stock number one:

1. Meta (META)

Meta is undoubtedly my biggest regret. I was one of the few investors buying Meta at its lows—I even bought it at the $88 bottom. But I made a crucial error by selling it in the upper $100s, around $195, thinking the stock had run too high and wanting to lock in profits. That was a huge mistake, as it’s now trading at $590.

Why is Meta such a compelling company? They have an enormous user base—3.5 billion people use their products monthly, whether it’s Instagram, Facebook, or WhatsApp. What’s remarkable is that they haven't even monetized WhatsApp yet. Despite investing heavily in the metaverse (losing over $10 billion annually on it), Meta still generated $52 billion in free cash flow last year.

Their fundamentals are impressive:

• Market cap: $1.54 trillion
• Enterprise value: $1.6 trillion
• Exceptional return on capital and low debt

When Meta was down, critics wanted Zuckerberg fired and claimed Facebook was obsolete. Yet, the data showed otherwise—people still use Meta’s platforms daily.

Meta’s 8-Pillar Analysis

Out of the eight pillars, Meta only fell short on two: 5-year PE ratio and price-to-free-cash-flow ratio. Revenue surged by $90 billion over the past five years, resulting in $30 billion in net income and $33 billion in free cash flow. Analyst projections indicate:

• Earnings per share (EPS) to grow from $23 to $32 over four years.
• Revenue to grow from $66 billion to $243 billion.

While not extraordinary, these numbers are solid. As principal-driven investors, we merge the story with the numbers. Buying based on a great story alone is speculation, while buying purely on numbers makes you a quant. Our goal is to find excellent companies at excellent prices.

Stock Analyzer Tool Insights for Meta

For a 10-year outlook, I assumed:

• Revenue growth: 4%, 7%, and 10%
• Profit margin: 27%, 31%, and 34%
• PE ratio: 20, 23, and 26
• Desired return: 9%

Based on these inputs, the stock analyzer produced:

• Low price: $320
• Middle price: $509
• High price: $775

Given Meta’s strong cash flow and dominant market position, these valuations make sense. I’ve set a watchlist price of $475, meaning that when Meta hits that level, I’ll reassess and possibly sell puts at lower prices.

2. Adobe (ADBE)

I recently started a position in Adobe at around $445 and sold some puts at lower prices. Adobe is an incredible company with a solid growth story. Despite some concerns about AI disrupting their business, I believe AI will actually enhance Adobe’s product offerings.

Adobe’s financials tell an impressive story:

• All-time high: $700 (2021)
• Low: $274 (during the downturn)
• Current price: Around $444

With 89% gross margins, Adobe generates significant free cash flow, often exceeding net income—a key metric for principal-driven investors.

Analyst Projections for Adobe

• EPS growth: 12% to 16% annually over the next five years
• Revenue growth: Double-digit increases from $22 billion to $38 billion

Stock Analyzer Tool Insights for Adobe

For Adobe, I used:

• Revenue growth: 6%, 10%, and 14%
• Free cash flow margin: 38%, 40%, and 42%
• PE ratio: 18, 21, and 24

Results:

• Low price: $381
• Middle price: $606
• High price: $960

At the current price of $444, Adobe shows a potential return of 133% if middle assumptions hold true.

3. Johnson & Johnson (JNJ)

Johnson & Johnson recently spun off its consumer health division, Kenview, streamlining its focus on high-margin pharmaceutical and medical device businesses. J&J remains a reliable, dividend-paying giant with over 60 years of consecutive increases.

Financial highlights:

• Dividend yield: 3.3%
• Free cash flow: $19 billion
• Dividend payout: $11.7 billion annually

Analyst Projections for J&J

• EPS growth: 6% to 8% annually
• Revenue growth: Modest at around 4% to 6% annually

Stock Analyzer Tool Insights for J&J

• Revenue growth: 2%, 3%, and 4%
• Profit margin: 19%, 22%, and 24%
• PE ratio: 16, 19, and 22

Results:

• Low price: $101
• Middle price: $140
• High price: $184

J&J is a slow grower but offers stability, consistent dividends, and the potential for long-term value creation.

4. Google (GOOGL)

Google remains a powerhouse with its dominant search engine and YouTube platform. Despite concerns about competition, Google continues to generate substantial cash flow.

Key metrics:

• Market cap: $2.4 trillion
• Enterprise value: $2.5 trillion

Analyst Projections for Google

• EPS growth: 12% to 21% annually
• Revenue growth: From $360 billion to $522 billion over the next five years

Stock Analyzer Tool Insights for Google

• Revenue growth: 4%, 7.5%, and 11%
• Profit margin: 22%, 24%, and 26%
• PE ratio: 20, 23, and 26

Results:

• Low price: $120
• Middle price: $190
• High price: $292

I plan to update my watchlist price to $180 and will continue selling puts to generate income while waiting for an attractive entry point.

5. Visa (V)

Visa is a financial juggernaut with outstanding margins and a bright future as global credit card adoption increases. Despite concerns about saturation in developed markets, emerging economies present enormous growth opportunities.

Key metrics:

• Gross margin: 80%
• Free cash flow: $16 billion to $19 billion annually
• Return on invested capital (ROIC): 22% to 26%

Analyst Projections for Visa

• EPS growth: 12% to 19% annually
• Revenue growth: Around 10% annually

Stock Analyzer Tool Insights for Visa

• Revenue growth: 6%, 10%, and 14%
• Free cash flow margin: 50%, 53%, and 56%
• PE ratio: 20, 24, and 28

Results:

• Low price: $206
• Middle price: $340
• High price: $550

I’ve set my watchlist price at $300, and I’ll be looking to sell puts at lower prices.

These are my top five stocks for 2025. Remember, investing isn’t about following short-term price movements—it’s about understanding the story, analyzing the numbers, and making well-informed decisions. If you're interested in learning more, check out our stock analyzer tool, which has been used over a million times by our community in the past year.

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