3 Investment Ideas for 2025

Now that the election is behind us—along with all the accompanying uncertainty—it’s time to “take stock” of our investments and explore some investment ideas for 2025.

I covered the “what ifs” of a Trump vs. Harris presidency in the last two issues of my Cabot Money Club magazine, discussing the potential policy changes (based on their campaign promises) and the sectors that may be the most attractive to investors in the new year.

Under Trump, some of the possible tax policy changes that may affect investors include:

· Extend expiring provisions of the 2017 tax law (which expire next spring), such as a deduction for “pass-through” business entities and deductions for U.S.-based research and their investments in machinery and equipment. If enacted, this change has the potential to create more capital for corporate investment and expansion, which should benefit the industrial sector.

· Lower the corporate tax rate from 21% to 15% for companies that manufacture their products in the U.S. This provision would also create more capital investment and investment opportunities in industrial companies.

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But, as I mentioned in my article, who knows if any of these proposals would actually be put forth, and more importantly, make it through Congress.

On a more realistic track, most market soothsayers and economists agree that the following expectations are highly possible, and offer investors some interesting investment ideas:

Declining interest rates. The Federal Reserve has recently begun its anticipated rate cuts, and sectors that should benefit include dividend-paying stocks, consumer defensive stocks, and growth stocks.

Expectations of governmental policy changes. Deregulation and less environmental legislation should help financial and fossil fuel businesses, as well as small-cap companies who often suffer under excessive regulatory oversight.

Predicted tariffs. The market expects Trump to impose additional tariffs on China, up to 20%. Some European companies may also be at risk. The net effect is probably going to be higher prices on any foreign goods, which will undoubtedly be passed on to consumers. That may be negative for multinational and certain tech companies (service and software, for example) but positive for domestic manufacturers. If history is any judge, sectors such as utilities, telecom services, and real estate may outperform, while automobile, capital goods, and technology hardware stocks may be under stress.

A more robust M&A and IPO market. Pundits think the relaxation of antitrust regulations, as well as a strengthening economy, will put both of these sectors back in play. Analysts at Bank of America report that historically the M&A sector has seen 50% more activity under Republican administrations than Democratic ones. For 2025, analysts expect that the continuing bull market, undervalued small caps (relative to large caps), and narrow credit spreads should all lead to increased M&A activity.

The Best Sectors for 2025

With that in mind, five of the most attractive sectors for the new year include:

· Small-cap stocks

· Financial: credit card companies, banks

· Energy: natural gas and American oil producers, oil service companies

· Industrials sector

· Transportation—trucking, railroads

I searched through my database looking for stocks with high potential for next year. After reviewing a couple of dozen companies, here are three investment ideas that I think will help investors participate in the coming growth:

3 Investment Ideas for 2025

I hope one or more of these stocks will find itself in your Christmas stocking!

My best wishes for the holiday season and a prosperous New Year for you and your families.

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