Top Trade Ideas for 2025
A Focus on High-Growth and Resilient Opportunities
As we step into 2025, I’ve narrowed down my top trade ideas to eight because, frankly, I saw a significant drop-off in quality when I got to the 9th. These picks reflect a dynamic market landscape characterized by technological advancements, shifting demographics, and sector-specific tailwinds. Here, I highlight the top trade ideas for the year, focusing on companies poised for growth and resilience. Each company is backed by a clear thesis on why it is positioned to outperform, along with a bonus look at SPHQ, a high-quality ETF that offers an alternative to the broader S&P 500 Index.
Credo Technology Group Holding Ltd (CRDO)
Thesis: Credo Technology Group specializes in high-speed connectivity solutions essential for AI infrastructure. Their active electrical cables (AECs) are pivotal in connecting servers to networking equipment, facilitating efficient data transfer.
Why It Will Do Well:
Surging Demand: The AI boom has led to increased demand for high-speed data connectivity.
Strong Financials: Recent earnings show a 600% increase in adjusted EPS and a 64% revenue rise to $72 million.
Positive Outlook: Projected revenue of $120 million for the upcoming quarter, driven by AI deployments and new cloud customers.
Additional Insights: Major clients like Microsoft and Amazon utilize Credo's AECs, highlighting their industry significance. Analysts have raised price targets, reflecting confidence in Credo's growth trajectory.
Finance of America Companies Inc (FOA)
Thesis: FOA focuses on reverse mortgages, capitalizing on the growing trend of retirees leveraging home equity. With an aging U.S. population, this market is set for expansion.
Why It Will Do Well:
Demographic Tailwinds: An increasing number of retirees seeking financial solutions.
Interest Rate Environment: Higher rates enhance profitability on existing reverse mortgages.
Market Leadership: FOA holds a dominant position with a first-mover advantage.
Additional Insights: With approximately $14 trillion in home equity among baby boomers, FOA is well-positioned to tap into this substantial market.
DXYZ (SpaceX Exposure)
Thesis: DXYZ offers indirect exposure to SpaceX, a leader in space exploration and satellite communications. Investors can benefit from SpaceX's innovations through this fund.
Why It Will Do Well:
SpaceX Dominance: Significant advancements in satellite internet services (Starlink) and cost-effective launch systems.
Fund Performance: DXYZ has surged over 300% since Election Day, reflecting investor enthusiasm.
Growth Potential: The space economy is projected to exceed $1 trillion by 2040.
Additional Insights: Despite impressive gains, DXYZ trades at a premium, with its share price significantly exceeding its net asset value. Investors should exercise caution due to potential overvaluation.
Chart Industries Inc (GTLS)
Thesis: Chart Industries is a key supplier of cryogenic equipment for the energy transition, including hydrogen and LNG projects.
Why It Will Do Well:
Strategic Partnerships: Recently secured an $11 million LNG deal with Bechtel and Woodside Energy.
Technological Leadership: Provides Integrated Pre-Cooled Single Mixed Refrigerant liquefaction technology.
Energy Transition: Global decarbonization efforts drive demand for their solutions.
Additional Insights: Chart's involvement in major projects, such as Woodside Energy's Louisiana LNG expansion, underscores its pivotal role in the evolving energy landscape.
Arcutis Biotherapeutics Inc (ARQT)
Thesis: Arcutis develops innovative dermatological treatments, offering alternatives to traditional topical steroids, which can have severe side effects.
Why It Will Do Well:
FDA Approvals: ZORYVE® (roflumilast) Cream approved for atopic dermatitis and seborrheic dermatitis.
Market Expansion: Plans to extend treatments to younger age groups and new indications.
Patient-Centric Solutions: Focus on safer, effective treatments enhances adoption.
Additional Insights: The documentary "Skin on Fire" highlights the risks of traditional steroids, emphasizing the need for safer alternatives like Arcutis's offering. Skin on Fire
Liquidity Services Inc (LQDT)
Thesis: Liquidity Services operates an online marketplace for surplus and returned goods, aligning with the growing circular economy.
Why It Will Do Well:
Strong Financials: Achieved a composite rating of 97, indicating robust market performance.
Major Clients: Serves industry leaders like Amazon and Honeywell.
Sustainability Focus: Aligns with corporate ESG initiatives.
Additional Insights: The company's recent stock surge and improved earnings reflect its effective business model and growing demand for sustainable inventory solutions.
Twilio (TWLO)
Thesis: Twilio’s communication platform powers customer engagement for businesses worldwide. As digital transformation accelerates, TWLO’s APIs enable companies to integrate SMS, voice, and video communication seamlessly into their workflows.
Why It Will Do Well:
Growing adoption of omnichannel communication strategies.
Diversification into customer data platforms and marketing automation.
Cost-cutting measures improving profitability.
Additional Insights: Twilio has a strong presence in the programmable communication space, which has become indispensable for companies prioritizing customer engagement. Its acquisition of Segment, a leading customer data platform, positions Twilio to dominate marketing automation and personalization. As enterprises seek to enhance customer experience, Twilio is increasingly becoming a core partner for both startups and established businesses.
TaskUs (TASK)
Thesis: TaskUs provides outsourced customer support and content moderation services for tech companies and digital platforms. With the proliferation of online content and the need for scalable support solutions, TASK is positioned to grow.
Why It Will Do Well:
Increasing demand for content moderation as digital platforms expand.
Strong partnerships with high-growth tech companies.
Focus on AI-driven automation to enhance efficiency.
Additional Insights: TaskUs effectively combines human expertise with AI-driven tools, enabling platforms to scale operations efficiently while maintaining high-quality service standards. Its focus on fast-growing industries like social media, e-commerce, and gaming positions the company to ride the wave of digital transformation. TaskUs also benefits from strong client retention due to its reputation for reliability and innovation.
SPHQ (Invesco S&P 500 Quality ETF)
Thesis: SPHQ is an ETF that invests in high-quality S&P 500 companies with strong balance sheets, high return on equity, and stable earnings. Quality-focused strategies tend to outperform during periods of market volatility or economic slowdown, making SPHQ an attractive option.
Why It Will Outperform:
Concentrated exposure to financially sound companies that can weather economic uncertainty.
Superior risk-adjusted returns compared to the broader S&P 500 Index.
Overweight in sectors like technology and healthcare, which offer long-term growth potential.
Additional Insights: SPHQ’s stock selection methodology favors companies with low debt-to-equity ratios and consistent earnings growth. This makes it particularly appealing for conservative investors seeking to mitigate downside risk while still benefiting from equity market gains. Its focus on high-quality names ensures it outperforms in volatile markets, offering a buffer against broader market declines.