Top 3 Magnificent 7 Stocks to Consider for 2025
Chicago, IL – December 24, 2024 – The Zacks Market Edge Podcast, hosted by Zacks Stock Strategist Tracey Ryniec, delves into the world of investing. Each week, Tracey invites guests to discuss current trends in stocks, bonds, and ETFs, and their implications for investors. For the latest episode, tune in here: Listen Now
The Magnificent 7: Your Investing Goldmine for 2025
This week, we bring you Episode #428 of the Zacks Market Edge Podcast.
- (0:35) – Which Magnificent 7 Stocks Should You Add to Your Portfolio in 2025?
- (9:30) – Tracey’s Top Picks for Your 2025 Watchlist
- (22:00) – Episode Recap: GOOGL, AMZN, META
- Podcast@Zacks.com
In this episode, Tracey dives solo into the Magnificent 7 stocks: Apple, NVIDIA, Alphabet, Meta Platforms, Amazon.com, Tesla, and Microsoft Corp.
The Evolution from FAANG to Magnificent 7
Historically, the leading group of big-cap stocks were known as the FAANG stocks, later evolving into FANGMAN, which included Netflix. However, recent shifts have seen Netflix removed from the list while Tesla took its place.
Now referred to as the Magnificent 7, this new cluster of major growth companies is spearheading the market as we approach 2025. Collectively, these stocks have outperformed the S&P 500 this year, with the Roundhill Magnificent 7 ETF (MAGS) soaring 69% year-to-date. The critical question persists: how much further can they go?
Investors should note that not all stocks in the Magnificent 7 share the same strengths. Some exhibit high valuations; for instance, Tesla has a forward P/E of 176, while others, like Alphabet, display more compelling metrics such as a Price-to-Book ratio of 7.4. This raises the question: which stocks among the Magnificent 7 present the most attractive opportunities for 2025?
Three Magnificent 7 Stocks to Watch in 2025
1. Alphabet Inc. (GOOGL)
Alphabet stands out as the most reasonably valued stock in the Magnificent 7, boasting a forward P/E of 23.9. Although this doesn’t classify it as a “value” stock—often identified by lower P/E ratios—it’s certainly cheaper compared to its peers.
The stock has surged 39% year-to-date, achieving all-time highs. Analysts anticipate earnings growth of 38.3% in 2024 and 11.1% in 2025. Alphabet has significant revenue streams, including YouTube, which recently generated $50 billion over the past four quarters.
Additionally, Alphabet now pays a dividend, with a yield of 0.4%. Is it a smart choice for your 2025 portfolio?
2. Meta Platforms, Inc. (META)
Meta Platforms has seen significant attention this year, with its stock rising 69% year-to-date, outperforming the S&P 500. Earnings forecasts suggest a remarkable increase of 52.5% in 2024 and 11% in 2025.
Despite its growth, Meta is trading at a reasonable forward P/E of 25.8, complemented by a PEG ratio of 1.3, indicating it combines growth and value traits. The firm has also initiated a dividend, providing a yield of 0.3%. Should Meta be a contender on your short list for 2025?
3. Amazon.com Inc. (AMZN)
Amazon’s evolution has seen it branch out beyond being merely an “everything store” to an “everything company,” with divisions like AWS and Whole Foods, all while expanding into entertainment and chip manufacturing.
Projections show astonishing earnings growth of 79% in 2024 and 20% in 2025. Intriguingly, it trades at the lowest price-to-sales (P/S) ratio among the Magnificent 7 stocks at 3.8, which, while not qualified as a value, remains attractive for a growth stock. For reference, Microsoft has a P/S ratio of 13.1, and NVIDIA’s is 29. Is Amazon a stock that deserves a spot on your list for 2025?
Additional Insights on the Magnificent 7 for 2025
For deeper insights, don’t miss this week’s podcast episode.
[In full disclosure, Tracey holds shares in AMZN, MSFT, and GOOGL in her personal portfolio.]
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