Value stocks are poised for a comeback in 2025 News ad

Going from worst to first is a concept that is often used in investing. Stocks that underperform the market one year are often among the best stocks to own in the next year. While timing the market isn’t easy, the challenge for investors is to find these stocks before they make a big turnaround.

Luckily, there are several indicators that can point you in the right direction. For example, you can look at analyst forecasts. When a stock is trading below the consensus price, it’s a good sign that there may be significant upside potential that the market hasn’t caught on to yet.

You can also look at Washington, DC. The intersection of public policy and investment is not always subtle. In many cases, you can choose a list of winners simply based on likely congressional policies.

Economics in general is another area to look for clues. Each month, investors receive economic indicators on the state of the labor market, housing, manufacturing, commodities, inflation and more. There’s a reason these reports make headlines; this is because they move markets.

With that in mind, here are three stocks that underperformed the market in 2024 and are now considered stable in 2025 for that reason.

Schlumberger, doing business as SLB New York Stock Exchange: SLB, is an international oilfield services company formerly known as Schlumberger. The fate of the company is closely connected with the oil market. This explains why SLB shares are down 24% in 2024 despite better revenue and earnings performance compared to last year.

Record drilling in the United States is suppressing oil prices, keeping the market well supplied. What would be optimistic for a company like SLB is that downstream companies are looking to open new wells.

This could prove challenging if President Biden confirms rumors that he will sign an executive order to permanently restrict offshore oil and gas drilling in certain areas. However, the trend will continue to favor new drilling, which supports the need for an overhaul of SLB shares.

Analysts are forecasting earnings growth of 7.6% over the next 12 months and have a consensus price target for SLB of $58.25, up 51% from current levels. It’s important to note that the consensus price comes after a series of price cuts by analysts since the company reported earnings in October.

SLB shares also offer investors a solid dividend with a yield of 2.86%. The three-year average annual growth rate of 4.5% helped investors stay ahead of inflation.

United Parcel Service Inc. New York Stock Exchange: UPS suffered a three-year downturn that saw the stock provide investors with a negative total return of 34.67%. This is despite a dividend that yields an attractive 5.27%.

The stock’s five-year chart tells the story. UPS stock hit a record high in 2021 and lasted into 2022. However, as higher inflation and interest rates weighed on consumer budgets, the company’s revenue and profit declined compared to last year. The company was also burdened by labor negotiations with the Teamsters union.

However, in its third-quarter earnings report released in October 2024, the company reported improvements in revenue and profit compared to last year. Analysts recommend a moderate buy for UPS shares.

The consensus price target of $151.10 gives investors roughly 22% upside and is supported by forecasts for earnings growth of 16% over the next 12 months.

Although many investors may have thought Lockheed Martin Corporation. New York Stock Exchange: LMT If LMT stock had risen under Trump’s deal, LMT stock would have fallen more than 20% in the last three months of 2024. The concern was the company’s valuation, which has since declined to a reasonable 17.4 times earnings.

The concern is that the new president will seek a peaceful resolution to conflicts in Europe and the Middle East. It is also believed that the DOGE committee will try to reduce defense spending, which will affect aerospace stocks and defense stocks.

But Lockheed Martin is not just another defense contractor. It is the largest contractor by revenue and market capitalization. The company’s latest earnings report showed a $166 billion order backlog across the company’s four business units. The company projects full-year fiscal 2024 sales of $71.25 billion.

Despite low single-digit earnings growth forecasts, analysts give LMT shares a Moderate Buy rating, with a consensus price target of $605.36. And this is due to the company’s dividend yield, which is 2.74% and has increased for 22 years in a row.