Two Shares Experiencing Negative Drops of 32% and 71% that Might Emerge as Significant Profit Opportunities in 2025
The S&P 500 might be close to its all-time high, but some stocks are still a steal, like real estate investment trusts (REITs) and financial technology (fintech) companies. Two such stocks worth considering are Realty Income and PayPal. I'm already invested in both and plan to add more, given their attractive prices.
A Rate-Sensitive Giant in My Portfolio
Realty Income is a significant part of my portfolio and has been for over a decade. This REIT owns single-tenant properties, with a diverse portfolio including retail, industrial, gaming, and agricultural properties. With the focus on recession-resistant and e-commerce resilient retail, it has proven its resilience. However, the commercial real estate sector is highly sensitive to interest rates, causing Realty Income to underperform the S&P 500 in the past couple of years. Despite the rough journey, its long-term performance has been impressive, producing annualized total returns of over 14% since its 1994 IPO and consistently increasing its dividend since the 90s.
A Fintech Comeback in the Making?
PayPal's significant rise during the pandemic's initial phase faded once things started normalizing. Despite a 2024 rebound, it's still below its 2021 peak. However, it could be on the verge of a breakout in 2025. Post pandemic, PayPal's leadership team underwent major changes, with a new focus on efficiency. These efforts are evident in its Q4 earnings, with a 6% revenue growth and 22% non-GAAP EPS growth. The company has also been investing in strategic initiatives like the Fastlane rapid checkout product, PayPal Everywhere cashback debit campaign, and an ad platform. While these initiatives haven't yet shown significant results, they're slated to in 2025, potentially driving up investor returns.
It’s All About the Long Game
It's essential to keep in mind that these are long-term investments, not just short-term gains. There's no guarantee that 2025 will see a surge in interest rates or that PayPal's initiatives will succeed earlier than expected. However, I'm confident that these stocks will significantly grow in value over the next decade. So, while we might see a few bumps along the way, a patient investor will likely reap the rewards.
The current attractive prices of Realty Income and PayPal make them prime candidates for further investing in the realm of finance and money. Despite its sensitivity to interest rates, Realty Income's long-term performance and consistent dividend increases make it a solid investment for the long game. PayPal's potential comeback, driven by its strategic initiatives, also presents an appealing opportunity for those looking to invest in fintech companies.