Non-Tech Stocks Poised to Outperform in 2025 News ad

Investors were primarily focused on technology stocks in areas such as artificial intelligence (AI), high-performance computing (HPC), and renewable and nuclear energy. However, other sectors offer attractive opportunities for those looking for a more diversified portfolio. Three non-tech stocks are set to rise in 2025 thanks to a combination of industry trends and the companies’ unique strengths. These three companies represent attractive investment opportunities with the potential for significant returns.

Cleveland-Cliffs Inc.: Looking to Steel in 2025

Cleveland-Cliffs Inc. New York Stock Exchange: CLF is a major player in the North American steel industry. As a vertically integrated enterprise, it covers all aspects of the metal processing industry, from iron ore mining to pellet production, direct reduced iron and ferrous scrap. This vertical integration allows Cleveland-Cliffs to control its supply chain and optimize production costs.

Cleveland-Cliff’s fiscal third quarter 2024 (3QFY24) earnings report showed revenue of $4.6 billion, down from $5.1 billion in the prior quarter. The company reported a GAAP net loss of $230 million, or $0.52 per diluted share, and an adjusted net loss of $156 million, or $0.33 per diluted share. Adjusted EBITDA for the quarter was $124 million. These results were impacted by several factors, including weaker demand, pricing pressure and the idling of the company’s No. 6 blast furnace in Cleveland. Despite these challenges, Cleveland-Cliffs achieved its lowest unit cost since 2021 and maintained liquidity of $3.8 billion as of September 30, 2024.

Cleveland-Cliffs completed its acquisition of Canadian steel producer Stelco on November 1, 2024. Stelco reported adjusted EBITDA of $64 million and margin of 13% in the third quarter of fiscal 2024. The acquisition diversifies Cleveland-Cliffs’ business beyond the automotive sector, providing access to low-cost assets and strengthening its position in the market.

In addition, Cleveland-Cliffs has appointed seasoned CFO Jane M. Cronin to its board of directors in anticipation that her experience will help improve the company’s financial strategy and corporate governance. The company also lowered its 2024 capital expenditure guidance to $600 million to $650 million and expects 2025 capital expenditures to be approximately $600 million.

Lennar Corporation: Building the Future

Lennar Corporation NYSE: LEN is one of the largest homebuilders in the United States. The company is engaged in the construction and sale of single-family homes, as well as land development, financial services and multifamily property management. Lennar operates in 26 states, primarily under the Lennar brand, and serves a wide range of buyers, from first-time buyers to luxury homebuyers.

Lennar’s fiscal fourth quarter 2024 earnings report showed net income of $1.1 billion, or $4.06 per diluted share. However, new orders were down 3% to 16,895 homes and deliveries were down 7% to 22,206 homes. Total revenue for the quarter was $9.9 billion and gross margin on residential sales was 22.1%. For the full fiscal year 2024, Lennar reported net income of $3.9 billion, or $14.31 per diluted share, with new orders up 11% and deliveries up 10%. Total revenue for the year was $35.4 billion.

The company is actively pursuing a strategic transition to a business model based on the principles of “asset-light and land-light”. As part of this strategy, Lennar plans to spin off its subsidiary, Millrose Properties, Inc., which will operate as an independent publicly traded land company. The move is expected to increase Lennar’s financial flexibility and allow it to focus on its core homebuilding operations.

In addition, Lennar acquired Rausch Coleman Homes, which is expected to have approximately 4,000 deliveries in 2025. This acquisition will expand Lennar’s presence in new and desirable markets in Arkansas, Kansas and Missouri, as well as expand its existing operations in Texas, Alabama, Oklahoma and Florida. In the first quarter of 2025, Lennar expects to deliver between 17,000 and 17,500 homes, with gross margins ranging from 19.0% to 19.25%. For all of 2025, the company plans to build between 86,000 and 88,000 homes, including Rausch Coleman’s contribution.

Carnival Corporation: Navigating the Waters of Recovery

Carnival Corporation New York Stock Exchange: CCL is a global cruise line and one of the largest travel companies in the world. It operates a fleet of cruise ships under various brands, including Carnival Cruise Line, Princess Cruises, Holland America Line, Seabourn, P&O Cruises, Costa Cruises, AIDA Cruises and Cunard. Carnival ships visit approximately 700 ports around the world and offer a wide variety of cruise experiences.

Carnival ended the year with record revenue of $25 billion, up 15 percent from last year, according to the company’s 2024 earnings report. The company’s net income for the year was $1.9 billion, with adjusted EBITDA of $6.1 billion, up 40% from the prior year. Operating income for the year was $3.6 billion, up 80% from last year.

In the fourth quarter of 2024, Carnival reported net income of $303 million and adjusted net income of $186 million, driven by higher ticket prices and onboard expenses. The company’s revenue for the quarter was $5.9 billion, up 10% from the same period in 2023.

Looking ahead to 2025, Carnival projects adjusted net income of approximately $2.3 billion and adjusted EBITDA of approximately $6.6 billion. The company is also focused on sustainability, reducing greenhouse gas emissions by 11% from the 2011 peak and achieving a 44% reduction in food waste per person from a 2019 baseline.

Something other than technology

Cleveland-Cliffs, Lennar and Carnival represent attractive investment opportunities in sectors outside the much-touted artificial intelligence space. Each company has unique strengths and can benefit from favorable industry trends. Cleveland-Cliffs intends to benefit from potential infrastructure spending and its diversified steel production capabilities. Lennar is well positioned to address the ongoing housing shortage through a strategic shift to an asset-light model and a focus on volume growth. Carnival is riding the wave of a strong recovery in the cruise industry, fueled by record bookings and efforts to improve the customer experience. While each company faces its own set of challenges, their growth prospects make them attractive for a diversified investment portfolio in 2025.

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