2 stocks you’ve never heard of that could be big winners in 2025

Stock market returns in recent years have been largely fueled by mega-cap tech stocks Nvidia and Microsoft. However, we’re about to enter a new rate-declining environment, and that could create some particularly compelling opportunities in smaller companies — including these two rate-sensitive companies that could potentially don’t be too familiar.

An innovative infrastructure play with great opportunity

There were some excellent businesses that hit the market during the 2021-2022 SPAC bubble and heaven Port (SKYH 2.20%) it seems he is one of them. The company’s primary business is building airport hangar campuses serving the private aviation industry. The clientele consists of CEOs, celebrities and more — for example, DJ Khaled often posts photos on Instagram from his Sky Harbor hangar.

The company currently has only four campuses in operation and 10 more are in various stages of construction or development. The management has plans to grow to 50 airports in the medium term and more beyond that.

The Sky Harbor business has a fantastic economy. The company expects a 35% return on equity from projects at its first 20 locations and aims to add adjacent revenue streams such as aircraft maintenance and brokerage as it expands. Even though it is far from approaching its true potential, Sky Harbor already expects to be cash flow positive by the end of 2025.

Lower interest rates could help Sky Harbor’s business in two main ways. First, without getting too technical, commercial property valuations generally go up when rates go down and go down when rates go up. Second, Sky Harbor relies on borrowed money to build new airport campuses, and a falling rate environment could dramatically improve borrowing costs.

Price sensitive real estate with tons of long term potential

The Howard Hughes Corporation (HHH -0.54%) it’s a unique type of real estate company — it’s not quite a land developer, it’s not quite a construction business, and it’s not quite a REIT. The company describes itself as a real-life version of the popular video game series Sim Cityand that’s pretty accurate.

Specifically, Howard Hughes develops large-scale master-planned communities that are closer in scale to small towns than the neighborhoods you probably think of when you hear the term. For example, The Woodlands in the Houston area is a Howard Hughes MPC, as is Summerlin near Las Vegas. Not long ago, the company acquired 37,000 acres in the Phoenix area to develop a new community from the ground up.

The basic idea is that Howard Hughes sells some land to home builders, who create residential neighborhoods. These neighborhoods create demand for commercial properties such as office buildings and retail centers that Howard Hughes develops and leases to tenants. The company will then sell some residential land, and the cycle repeats — for decades. This is a business model that requires a long time to unlock the full value of its assets.

Howard Hughes has underperformed the market in recent years, and the biggest reason is the declining values ​​of its operating assets, much of which consists of office buildings. Rising rates also didn’t help lower commercial property valuations.

Even with the declines, a conservative valuation by management estimates the intrinsic value of the company’s assets at about $109 per share — about 45% more than the stock’s current price. Additionally, falling interest rates could be a positive catalyst for the company’s commercial properties in the coming years.

Both are built for long-term compounding

While I think these two stocks could do great in the falling rate environment we’re likely to experience for at least the next year or so, they’re all designed to be great long-term compounds. I hold both stocks in my portfolio, not just because I think they will outperform the market in 2025, but because I think they will be excellent long-term wealth creators.