It’s been a strong year for many stocks. But now that we’re in December, many investors are looking to diversify and rebalance their portfolios. This is a simple strategy in which you take some profits from your winners and move them to stocks that haven’t done as well in 2024.
Selling stocks at overbought levels doesn’t have to mean your opinion of the company has changed. But as the old saw goes, nobody got broke taking a profit. And if a stock is overvalued, trimming your position can protect you from downside risk.
That’s particularly true when you can allocate that capital toward some underperformers with a bright outlook. And if you have about $1,000, there are some attractive stocks that you can own for less than $100 per share. Each of these stocks underperformed the market in 2024, but each company offers investors reasons to believe its fortunes could change in 2025.
1. There’s Still Time to Take a Ride With UBER Stock
For the first few years it was publicly traded, Uber Technologies (NYSE:UBER) fit into a category of stocks that I call “yeah but” stocks. In the case of Uber, the company was the leader in a category created by Uber 15 years ago.
The model made sense. The company’s path to profitability was another story. That’s where the “but” came in. As in, “But will the company ever turn a profit?” This became an existential issue in 2020.
However, the company has pivoted and branched out into areas such as food delivery, making the model more sustainable and solidly profitable. The proof of that is laid out on page 8 of the company’s earnings presentation, where the company shows a 55% year-over-year increase in earnings per share (EPS).
That hasn’t shown up in the UBER stock price, which is up just 1.4% in 2024. Investors seem to be more concerned about Uber’s relevance in the future of autonomous driving. Ok, so it may not be a forever stock. But that future is still years away, if it comes at all. In the meantime, the 33% projected earnings growth should allow Uber to grow into its lofty 32x forward P/E ratio.
2. Get Ahead of the Market With This Chip Sector Bellwether
Semiconductor stocks have been on the bearish side of the cyclical trade. That’s a key reason why shares of Lam Research Corp (NASDAQ:LRCX) are down 3% in 2024 and down more than 30% from the stock’s all-time high it made in July.
However, the supply and demand equation is expected to break in favor of chipmakers in 2025. That will be bullish for a company like Lam Research that designs, manufactures, and services the fabrication equipment used to make semiconductors.
The company generates approximately 30% of its quarterly revenue from China. That’s drawn the attention of the U.S. government and could be a headwind for Lam stock. However, those revenue concerns may be offset if the company gets the expected recovery in the NAND flash memory market. In addition to revenue, that would lift the company’s operating and gross margins.
3. Buy the Dip in the Stock of This Industry Leading Miner
Gold has been one of the best-performing asset classes in 2024. That’s been welcome news for fans of the yellow metal. While the spot price of the physical metal has been moving consistently higher, the same can’t be said for several basic materials stocks, particularly gold mining stocks like Newmont Goldcorp Corp (NYSE:NEM).
NEM stock is up just 0.8% in 2024. Like many miners, Newmont is still trying to navigate a higher-rate environment that is good for gold prices but raises the operating costs for mining companies, who may find it more difficult to raise capital.
Mining stocks had a strong year, fueled by expectations of lower interest rates. However, Newmont stock has dropped 30% since the beginning of November, when the Federal Reserve indicated that the pace of interest rate cuts may slow down in 2025.
However, since the company’s earnings report in late October, several analysts have raised their price targets for NEM stock above the consensus price of $54.31 which is already 30% higher than the stock’s closing price on December 12.