3 champion investments to beat the stock market in 2025

Investors should already being looking into 2025 and thinking how they might be able to beat the stock market. This year has been great for me with returns somewhere in the region of 50%. So, what stocks could help me beat the market again in 2025? Here are some ideas.

Build-A-Bear Workshop

High-octane growth doesn’t come just from technology segments. Build-A-Bear Workshop (NYSE:BBW) is an American teddy bear retailer and its stock has seen 1,239% growth over the past five years. It’s not short on momentum, which is a very important quality as waiting for falling stocks to bottom out can be a losing strategy.

From a valuation perspective, the company is trading at 9.7 times forward earnings — a 43% discount to the consumer discretionary sector. It also boasts a price/earnings-to-growth (PEG) ratio of 1.15, which I consider good value, noting the sector average of 1.59 and forward dividend yield of 2.2%.

What’s more, the company has outperformed earnings estimates in all but four quarters over the past five years. I like companies that outperform estimates and surprise the market positively as the biggest market movements are often on earnings day.

Nevertheless, there are risks. Consumer discretionary stocks are cyclical and Build-A-Bear appears to produce a lot of its goods in China. That’s a concern if Trump levies heavy tariffs on China.

These could be near-term issues, however. Thinking long term, management have created a strong brand and are yet to tap major markets like Germany or Japan. I haven’t bought yet, but I may move over the next month depending on other variables in my portfolio.

Celestica

Celestica (NYSE:CLS) is one of my big winners from 2024 and I’ve just bought more. This electronics manufacturing stock is up 240% over 12 months but continues to trade at a discount to the market. The current price-to-earnings (P/E) ratio is 23.4% — a modest discount to the Information Technology sector — and an incredibly attractive PEG ratio of 0.85 — a 55% discount to the sector average.

This American-Canadian firm is one of the unsung heroes of the artificial intelligence and data centre revolution, producing things like switches and other hardware solutions that enable these technological advancements.

Personally, I think this is a great company, but I can see the technical metrics are indicating that the stock might be overbought in the near term. The relative strength index is 81.9 and this reflects the fact that investors have been pouring into this firm in recent months.

Twilio

Twilio (NYSE:TWLO) has disappointed investors for several years, but appears to be entering a new phase. Reckless acquisitions and a bloated cost structure are things of the past and the earnings forecast has improved accordingly.

The firm now trades at 27.9 times forward earnings and has a PEG ratio of 0.88 — that’s very attractive once again. Given the track record for underperforming, the P/E ratio doesn’t leave much room for error. However, I’m backing this increasingly lean app communications stock and may top up my position.

The post 3 champion investments to beat the stock market in 2025 appeared first on The Motley Fool UK.

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James Fox has positions in Celestica Inc and Twilio. The Motley Fool UK has recommended Build-A-Bear Workshop. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.