Bullish Outlook for 2025: Top Stocks to Watch
As the year comes to a close, optimism is running high for 2025. With the incoming administration expected to implement pro-business policies, many are predicting a surge in economic growth. Savita Subramanian, head of US equity strategy at Bank of America, is among those who share this optimism, forecasting a 13% increase in the S&P 500.
Large-Cap Value Stocks: The Way to Go
Subramanian recommends focusing on large-cap value stocks, which are likely to benefit from deregulation and tax cuts. “Think about what’s in large-cap value,” she says. “It’s big regulated companies that are going to get a break under a regulatory light administration.” Bank of America’s top picks for 2025 reflect this strategy, with two standout stocks catching our attention.
AT&T: A Telecom Giant
First up is AT&T, a blue-chip stalwart with a market cap of $162 billion. This year, the stock has risen nearly 36%, driven by increases in subscriber numbers. In its last reported quarter, AT&T added 226,000 fiber subscribers, marking 19 quarters in a row with 200,000-plus net fiber adds. The company also reported strong gains in postpaid phone customers, with 403,000 net adds.
A Reliable Dividend Payer
AT&T is also one of the market’s most reliable dividend payers, with a modern dividend history stretching back to 1984. The company’s latest dividend payment, set at $0.2775 per common share, annualizes to $1.11 and gives a forward yield of 4.91%.
Bank of America’s Top Pick
Bank of America analyst Dave Barden notes AT&T’s subscriber gains and cash flows as attractive data points, writing, “Our top large cap telecom pick for 2025 is AT&T. Consistent operational performance is delivering improved financial results that are beginning to be reflected in an improved stock valuation.” Barden puts a Buy rating on T shares, with a price target of $28, suggesting a one-year upside potential of ~23%.
Block, Inc.: A Fintech Leader
Next up is Block, Inc., a leading fintech company founded by tech billionaire Jack Dorsey. Formerly known as Square, Block has established itself as a leader in payment processing, with a portfolio that includes the popular Cash App digital payment tool.
Strong Financial Results
In its last reported quarter, Block’s gross profits from Square and Cash App rose 16% and 21% year-over-year, respectively. Total net revenue was $5.98 billion, up 6.4% year-over-year. The company’s adjusted free cash flow for the 12-month period ending September 30 was $1.5 billion, up 59% year-over-year.
Bank of America’s Top Payments Pick
Bank of America analyst Jason Kupferberg sees Block at the start of a potentially strong performance ramp, writing, “SQ is our top Payments pick for ’25. As a US-centric re-acceleration story, we believe shares can outperform.” Kupferberg puts a Buy rating on SQ, with a price target of $115, implying a 35% gain in the next 12 months.
A Strong Buy Consensus
Both AT&T and Block have garnered Strong Buy consensus ratings from analysts, with average price targets suggesting upside potential of 17% and 18%, respectively, over the next year.
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