With the S&P 500 boasting a remarkable 25% gain in 2024, market optimism continues to build as we approach 2025. JPMorgan Chase’s chief US equity strategist, Dubravko Lakos-Bujas, points to several factors underpinning this positive outlook, including a strengthening business cycle, the expanding influence of artificial intelligence (AI), easing global central bank policies, and the Federal Reserve’s discontinuation of quantitative tightening. These favorable conditions, coupled with record household wealth and potentially lower energy prices, suggest a promising environment for US equities. Lakos-Bujas anticipates ongoing dispersion across equities, with broadening performance extending to segments offering more attractive valuations.
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Echoing this sentiment, several top-rated JPMorgan analysts advocate for investing in traditional value stocks. Let’s delve into two of their “best idea” picks for the upcoming year, leveraging insights from TipRanks to gain a comprehensive understanding of their potential.
Two Value Stocks Poised for Growth
JPMorgan’s analysts have identified two companies that they believe represent compelling investment opportunities in the value stock space: 3M (MMM) and TransUnion (TRU). Both companies have demonstrated strong performance in 2024 and possess unique characteristics that position them for further growth.
3M (MMM): A Diversified Giant with Upside Potential
3M, a Dow Jones and S&P 500 component, is a global conglomerate with a vast portfolio of products spanning various sectors, from office supplies and industrial materials to healthcare and consumer goods. The company’s diversified nature and long history of innovation have contributed to its resilience and market leadership.
3M has outperformed the broader market in 2024, with its stock price surging by 46%. The company’s recent financial results further reinforce its strong position, with Q3 2024 revenue exceeding expectations and non-GAAP EPS coming in at $1.98, surpassing forecasts by 8 cents. Moreover, 3M’s consistent dividend payouts, spanning over a century, provide investors with a reliable income stream.
JPMorgan analyst Stephen Tusa, a highly ranked Wall Street expert, identifies 3M as a top value play with significant upside potential. He projects 10%+ EPS growth in 2025, driven by revenue visibility, restructuring initiatives, and productivity improvements. Tusa highlights the company’s potential to achieve $11 per share in EPS, representing a substantial upside of over 50%. He assigns an Overweight (Buy) rating to MMM with a $165 price target, suggesting a potential 28% upside in the next year.
While JPMorgan holds a bullish view on 3M, the overall consensus rating is a Moderate Buy, based on 10 recent analyst reviews. The average price target of $151.67 indicates a potential one-year gain of approximately 18%.
TransUnion (TRU): Capitalizing on Data and Technology
TransUnion, a leading credit reporting agency, provides consumer and vendor services ranging from credit reports and fraud alerts to data analytics and risk management solutions. The company’s focus on data science and its innovative OneTru platform position it well to navigate the evolving financial landscape.
TransUnion’s Q3 2024 results showcased robust financial performance, with revenue exceeding expectations by $24.5 million and non-GAAP EPS surpassing forecasts by 3 cents. The company’s 12.5% year-over-year revenue growth and 14% year-over-year EPS growth underscore its strong momentum.
JPMorgan’s 5-star analyst Andrew Steinerman views TransUnion as a compelling value stock, citing its attractive valuation relative to peers and its consistent execution against stated plans. He emphasizes the potential for further re-rating as the company continues to deliver on expectations. Steinerman anticipates that TransUnion’s OneTru platform and improving consumer credit activity will drive growth in the coming year. He assigns an Overweight (Buy) rating to TRU with a $124 price target, indicating a potential 31% upside.
The consensus rating for TransUnion is a Moderate Buy, based on 13 analyst reviews. The average price target of $120.25 suggests a potential one-year gain of approximately 27%.
Conclusion: A Bullish Outlook for Value Stocks
JPMorgan’s bullish outlook on the US equity market, combined with its analysts’ strong recommendations for 3M and TransUnion, highlights the potential for value stocks to outperform in 2025. Both companies demonstrate strong fundamentals, innovative strategies, and compelling growth prospects, making them attractive investment options for discerning investors. Remember to conduct thorough research before making any investment decisions.
