U.S. stock markets have maintained their northward journey in 2024 after an astonishing rally in 2023. The bull run has gained further thrust as major stock indexes have posted numerous all-time highs on both intraday and closing basis so far this year. Year to date, the three major stock indexes — the Dow, the S&P 500 and the Nasdaq Composite — have advanced 17.7%, 27.6% and 33.7%, respectively.
Aside from technology stocks, several old economy stocks have advanced to a great extent this year. Investing in these untapped stocks with a favorable Zacks Rank should lead to profits in 2025 too.
Five such old economy stocks are - Vistra Corp. VST, Sprouts Farmers Market Inc. SFM, MasTec Inc. MTZ, Comfort Systems USA Inc. FIX, and Westinghouse Air Brake Technologies Corp. WAB.
Old Economy Stocks Thrive
The major driver of last year and this year’s rally was globally booming artificial intelligence (AI), especially generative AI. Companies that have extensive application of AI in their final products have become multi-baggers in the past 24 months. Some stock prices have skyrocketed 300-400% during this period.
These highly overvalued stocks make a large section of financial researchers and analysts skeptical of investing, although the near-term business outlook of these entities remains solid. The overstretched valuation of these stocks makes them less attractive in the investing arena.
Meanwhile, market participants have other sectors to look into. Supported by systematic reduction of the inflation rate and the Fed’s aggressive interest rate cut policies, several old economy stocks have rallied this year. These old economy stocks have transformed the ongoing rally into a broad-based one with huge opportunities for portfolio diversification.
5 High-Flying Old Economy Stocks to Buy for 2025
These five old economy stocks have significantly advanced this year. Despite the rally, these companies have strong revenue and earnings growth potential for 2025. Moreover, these stocks have seen positive earnings estimate revisions for 2025 over the last 30 days. Each of our picks carries either a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The chart below shows the price performance of our five picks year to date.
Zacks Investment Research
Image Source: Zacks Investment Research
Vistra Corp.
Zacks Rank #1 Vistra operates as an integrated retail electricity and power generation company. VST retails electricity and natural gas to residential, commercial, and industrial customers across 20 states in the United States and the District of Columbia. VST operates through six segments: Retail, Texas, East, West, Sunset, and Asset Closure.
VST announced that it would acquire its remaining 15% interest in Vistra Vision LLC. Utility operators are looking for new avenues to increase their clean electricity generation assets and lower emissions. Vistra’s decision to become the sole owner of Vistra Vision with a portfolio of highly-valuable, carbon-free assets in the key growing markets across the United States, should be immensely fruitful for it going forward.
Vistra has an expected revenue and earnings growth rate of 12.6% and 26.4%, respectively, for next year. The Zacks Consensus Estimate for next-year earnings has improved 3.1% in the last 30 days. The stock price of VST has soared 285% year to date.
Sprouts Farmers Market Inc.
Zacks Rank #1 Sprouts Farmers Market’s focus on product innovation, emphasis on e-commerce, expansion of private label offerings and targeted marketing with great pricing every day bodes well. SFM has been lowering operational complexity, optimizing production, improving in-stock position and updating to smaller format stores.
Buoyed by the performance, SFM has provided decent 2024 guidance. SFM anticipates a 7% year-over-year increase in comparable store sales for the year, contributing to expected net sales growth of 12%.
Sprouts Farmers Market has an expected revenue and earnings growth rate of 10% and 14.4%, respectively, for next year. The Zacks Consensus Estimate for next-year earnings has improved 1.9% in the last 30 days. The stock price of SFM has jumped 199.7% year to date.
MasTec Inc.
Zacks Rank #1 MasTec’s third-quarter 2024 earnings surpassed the Zacks Consensus Estimate 32.5% and grew 71.6% year over year. A diversified business model, favorable macro trends across its end markets, improved project efficiencies and project mix backed MTZ’s trends during the quarter. Although revenues missed the consensus mark by 5.3% and marginally declined year over year by 0.3%, the backlog growth during the quarter was encouraging.
At the end of Sept. 30, 2024, MTZ had an 18-month backlog of $13.86 billion, up 11% year over year and 3.9% sequentially. The upside was driven by strong bookings of renewable energy projects. Backed by strong third-quarter performance, MTZ lifted its 2024 view for adjusted EPS and adjusted EBITDA.
MasTec has an expected revenue and earnings growth rate of 8.6% and 45.5%, respectively, for next year. The Zacks Consensus Estimate for next-year earnings has improved 17.9% in the last 30 days. The stock price of MTZ has surged 76.7% year to date.
Comfort Systems USA Inc.
Zacks Rank #2 Comfort Systems USA is actively refining its operational and strategic approach across merchandising, pricing, and logistics, aiming for efficiency and margin growth. SFIX has significantly reduced its inventory from a peak, reflecting disciplined management that is expected to continue.
SFIX’s efforts to expand gross margins are evident in cost negotiations and logistical optimizations, with an anticipated increase in margins. SFIX’s strategic priorities include operational excellence, enriching client interactions for higher lifetime value and adapting to evolving needs for sustainable growth.
Comfort Systems USA has an expected revenue and earnings growth rate of 7.9% and 20.8%, respectively, for next year. The Zacks Consensus Estimate for next-year earnings has improved 5.4% in the last 30 days. The stock price of FIX has climbed 125% year to date.
Westinghouse Air Brake Technologies Corp.
Zacks Rank #2 Westinghouse Air Brake Technologies is a leading global provider of equipment, systems, digital solutions and value-added services for freight and transit rail industries. Since WAB’s fortunes are tied to the broader economy, improvement of the same led by cooling inflation has led to this double-digit gain.
Focus on new technologies to improve safety and reliability, together with restructuring and cost cutting actions are the main drivers of WAB’s strength. WAB’s strong free cash flow generating ability ensures continuity in its dividend payments and share buybacks. WAB’s comprehensive product portfolio and strong customer relationships also augur well.
Westinghouse Air Brake Technologies has an expected revenue and earnings growth rate of 4.7% and 13.6%, respectively, for next year. The Zacks Consensus Estimate for next-year earnings has improved 0.9% in the last 30 days. The stock price of WAB has appreciated 59.7% year to date.
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