A third of the market is trading lower this year. Some of the laggards can lead the way higher in 2025.
It’s been a good year for most investors, but not every investment has participated in the rally. Roughly a third of the U.S. exchange-listed stocks are trading lower in 2024. Many of them won’t bounce back until they tackle the reasons they were left behind, but more than a few could beat the market next year.
Advanced Micro Devices (AMD -2.39%), Comcast (CMCSA 1.23%), and Realty Income (O -1.24%) are three stocks trading slightly lower this year and could go from being laggards to leaders in 2025. Let’s take a closer look at these potential bounce-back candidates.
1. Advanced Micro Devices: Down 11% in 2024
The rising popularity of artificial intelligence (AI) has driven demand for AI processors to fuel the resource-intensive revolution. Some of the market’s biggest winners have been AI chip plays, but somehow, AMD has yet to get its chin back up over the pull-up bar from the start of this year. AMD is just one of eight stocks with market caps north of $200 billion that are trading lower in 2024.
The company is certainly a beneficiary of the AI boom. Its data center segment saw revenue skyrocket 122% in its latest quarter. The $3.5 billion in business that it generated in the quarter is more than half of its $6.8 billion top-line result.
Yes, AMD is also reeling in other categories. Its gaming business has plummeted 69% over the past year, and its embedded segment scored a 25% year-over-year drop. This doesn’t mean that this company is stuck in reverse like its stock chart in 2024.
Image source: Getty Images.
The overall business is still growing — and at an accelerating pace. The 22% increase that AMD recorded in the third quarter is its strongest top-line jump in two years. Some analysts may be forecasting an overall slowdown for AMD’s AI business but still see revenue growth accelerating to 27% for all of 2025.
Profitability is growing even faster, more than doubling in its latest quarter, so the segments going the wrong way aren’t impacting the bottom line. AMD isn’t cheap at 26 times forward earnings, but if it’s able to keep growing its overall business north of 20% for the next couple of years, it could be a bargain at these prices.
2. Comcast: Down 11% in 2024
Shares of Comcast tumbled nearly 10% on Monday, making it the latest entry into the Sinkers of 2024 club. The media giant took a hit after warning that it expects to lose more than 100,000 broadband subscribers in the current quarter. That’s a larger net decline than it suffered through the first six months of this year combined and an accelerating negative trend following the 87,000 internet accounts it surrendered in the third quarter.
This isn’t ideal. Comcast’s Xfinity cable television business has been fading for years as customers cut the cord in favor of streaming alternatives, but the larger broadband connectivity business was supposed to be a steady source of reliable revenue. The company blames the challenging quarter on a pair of devastating southeastern hurricanes, but more importantly, the rising popularity of cheaper connectivity provided by wireless carriers.
It would be wrong to dismiss Comcast despite the problematic trend for its core business. The company’s Wicked has become one of this year’s highest grossing films, with a second part rolling out next November. It could land another $5 billion next year following last year’s sale of its minority stake in Hulu.
On the theme-park front, the bar-raising Epic Universe theme park is set to open in May. The event should raise the weight of Comcast’s gated attractions, which currently make up only a small part of the overall business. There’s also a nearly 3% dividend that has been consistently hiked since being reinstated in 2008.
3. Realty Income: Down 2% in 2024
Seeing Realty Income’s price trade even a smidgeon lower this year is enough to have you mutter its ticker symbol out loud. (Spoiler alert: Realty Income’s ticker is simply the letter O.)
What makes this leading real estate investment trust (REIT) so “Oh” worthy right now? With a portfolio of 15,457 properties across 90 different industries, this well-diversified REIT stands out in the crowd. It emphasizes high-quality tenants in recession-resistant industries, so it’s not a surprise that it had a 98.7% occupancy rate at the end of September.
Some REITs offer quarterly distributions, but Realty Income sends investors a check every month. The best REITs have a long streak of annual payout hikes, and Realty Income has come through with 108 consecutive quarters of rising dividends.
The REIT sees a 5% increase in adjusted funds from operations in 2025, so the long-running winning streak of payout boosts should continue for the near future. With interest rates already heading lower, Realty Income’s 5.6% yield, which may have started the year just marginally ahead of the country’s best money market funds, is now a lot more attractive. Oh, indeed.
Rick Munarriz has positions in Realty Income. The Motley Fool has positions in and recommends Advanced Micro Devices and Realty Income. The Motley Fool recommends Comcast. The Motley Fool has a disclosure policy.
