It was a good year for most investors, but not all investments participated in the rally. About a third of US stocks are trading lower in 2024. Many of them won’t rebound until they address the reasons they were left behind, but more than a few could beat the market next year .
Advanced Micro Devices (AMD -1.99%), Comcast (CMCSA 0.96%)and Income Realty (O -1.18%) 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 candidates to rebound.
1. Advanced Micro Devices: Down 11% in 2024
The growing popularity of artificial intelligence (AI) has driven the demand for AI processors to power the resource-intensive revolution. Some of the biggest winners of the market have been AI chip plays, but somehow, AMD has not yet taken its chin above the pull-up bar since the beginning of this year. AMD is just one of eight stocks with market caps north of $200 billion that will trade lower in 2024.
The company is certainly a beneficiary of the AI boom. Its data center segment saw revenue grow 122% in its last quarter. The $3.5 billion in business that generated in the quarter is more than half of its $6.8 billion primary result.
Yes, AMD is breaking even in other categories. Its gaming business fell 69% over the past year, and its integrated segment marked a 25% year-over-year drop. This does not mean that this company is stuck in reverse as its stock chart in 2024.
Image source: Getty Images.
The overall business is still growing – and at an accelerating rate. The 22% increase that AMD recorded in the third quarter is its strongest jump in the top line in two years. Some analysts may predict an overall slowdown for AMD’s AI business, but they still see revenue growth accelerating to 27% through 2025.
Profitability is growing even faster, more than doubling in its last quarter, so the segments that are going wrong have no impact on the bottom line. AMD is not pretty at 26 times forward earnings, but if it is able to continue to grow its overall business north of 20% for the next two years, it could be a bargain at these prices.
2. Comcast: Down 11% in 2024
Comcast shares fell nearly 10% on Monday, making it the latest entry into the Sinkers of 2024 club. The media giant took a hit after warning it expects to lose more than 100,000 broadband subscribers in the current quarter. That’s a larger net decrease than it suffered during the first six months of this year combined and a negative trend accelerated after the 87,000 Internet accounts it gave up in the third quarter.
This is not ideal. Comcast’s Xfinity cable television business has been floundering 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 fourth challenge on a pair of devastating southeast hurricanes, but more importantly, the growing popularity of a cheaper connection provided by wireless carriers.
It would be wrong to dismiss Comcast despite the problematic trend for its core business. The company Bad has become one of the biggest films of this year, with a second part coming out next November. It could land another $5 billion next year after last year’s sale of its minority stake in Hulu.
On the theme park front, the bar-growing Epic Universe theme park is slated to open in May. The event should lift the weight of Comcast’s gate attractions, which currently make up only a small portion of the overall business. There is also a dividend of almost 3% which has been constantly increased since its reinstatement in 2008.
3. Realty Income: Down 2% in 2024
Seeing the price of Realty Income trade even a smidgeon lower this year is enough to have you muttering its ticker symbol out loud. (Spoiler alert: Realty Income’s ticker is just the letter O.)
What makes this real estate investment trust (REIT) so “Oh” worthy right now? With a portfolio of 15,457 properties in 90 different industries, this well-diversified REIT stands out in the crowd. It emphasizes high-quality tenants in recession-resistant industries, so it’s no surprise that it had an occupancy rate of 98.7% 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 growth, and Real Income has come up with 108 consecutive quarters of rising dividends.
The REIT sees a 5% increase in adjusted funds from operations in 2025, so the long winning streak of boosting payouts should continue for the foreseeable future. With interest rates already lower, Realty Income’s 5.6% return, which might have started the year just marginally ahead of the country’s best money market funds, is now much higher attractive Oh, really.