2 return shares to buy before 2025

The stock market has been on a tear for the past year. All the top market indices have recently risen to new highs, but there are some notable names that are trading at discounts. Here are two stocks trading well off their highs that could bounce back in the year ahead.

1. Nike

NIKE (NKE 0.18%) is a leading brand in a growing athletic apparel market, but its share price is trading 50% off its previous peak due to poor sales performance. The company is a good bet for a change after recently hiring former company veteran Elliott Hill as its new CEO.

Although Hill won’t be on the job until Oct. 14, Nike is already making progress on its turnaround strategy. The company is in the process of cutting costs by $2 billion over three years, which could have a significant impact on shareholder returns. Nike began this cost-cutting effort last year, leading to a 15% increase in earnings in fiscal 2024.

Strong demand for Nike fitness products are great indicators for the future. The company sees opportunities to simplify its product mix, which could help it invest more in its best-selling products, such as running shoes and fitness apparel.

There is also untapped potential for Nike to leverage its brand power to capture more demand at lower prices. Nike plans to launch new footwear next year priced under $100, which could help the brand gain market share.

Nike is a big company with deep pockets to invest in new products and innovation, especially in shoe cushioning technology, while paying shareholders a dividend along the way. Its trailing dividend yield of 1.67% is the highest in 15 years, highlighting the stock’s value right now.

Nike is making good progress in cutting costs and changing its product mix to deliver better growth, but investors should expect Hill to introduce some ideas of his own that could boost investor sentiment and send Nike shares higher in 2025.

2. Roku

More than 83 million households use Roku (ROKU 0.58%) as their TV gateway, and the number of households signing up grew 14% year-over-year in the second quarter. After falling in the first half of the year, the stock is up 24% in the past three months and could have more room to run.

Roku makes a small portion of its revenue from streaming device sales, but most of its $3.7 billion in revenue comes from advertising and sales of streaming subscriptions on its platform. The recovery in the advertising market over the past year has benefited Roku’s business, with the platform’s revenue growing 11% year over year in Q2.

Roku’s growth could accelerate even more over the next few years as management begins to turn to new ways to monetize its users. For example, it uses its own payment service Roku Pay to simplify the process of signing up for premium streaming services offered on the platform.

Roku is also leaning more heavily on partnerships to drive growth in its advertising business. Recently collaborated with Trade officea technology platform that helps brands buy and manage advertising campaigns. This partnership will help third-party brands have better data about Roku’s viewers and therefore can accelerate the growth of Roku’s advertising revenue.

Roku has a lot of untapped potential in a connected TV advertising market expected to reach $38 billion by 2024, according to GroupM. Investors can buy the stock at a reasonable price-to-free cash flow ratio of 33, which may not reflect the potential for sustained double-digit growth over the long term.