We recently published a list of the 12 Best Stocks to Buy in 2025 for Beginners. In this article, we are going to take a look at where Eli Lilly and Company (NYSE:LLY) stands against other best beginner stocks to buy in 2025.
Stock Market Outlook for 2025
On December 12, Tom Lee, Fundstrat Global Advisors managing partner and head of research, appeared on CNBC to talk about his 2025 playbook. After two years of significant market gains, Lee’s playbook painted an optimistic yet cautious outlook for the stock market in 2025. He anticipated that the S&P 500 would rise to approximately 7,000 by mid-2025 before retreating to around 6,600 by the end of the year. This highlights an overall expected increase of about 8% for the year, consistent with historical averages for stock market returns.
Furthermore, Lee estimated the Earnings Per Share (EPS) for the S&P 500 to be around $260 in 2025, going up to $300 in 2026. These numbers are slightly below the Wall Street consensus estimates, which show an average of around $268 for 2025. Talking about his investment thesis, Lee believed several themes could bring a positive trajectory in the market in 2025. In his own Dickensian version, he predicted a “tale of two halves,” where the first half of 2025 is expected to see strong market performance, with a potential pullback in the second half. The positive first-half performance is attributed to factors such as market-friendly initiatives under President Trump’s administration and Federal Reserve policies. The pullback in the second half of 2025 reflects historical trends after strong consecutive years.
READ ALSO: 12 Undervalued Defensive Stocks for 2025 and 10 Best Soaps and Cleaning Materials Stocks to Invest In.
Mega Cap Companies: Is There Potential?
Lee was of the opinion that the small-cap sector may have potential even though it has historically underperformed relative to large-cap stocks. He also talked about mega-cap companies and how they’re leading, mentioning that investors typically reach for these companies when there is even a possibility of risk in the market. In addition, mega-cap stocks are highly sensitive to falling interest rates. Since the tech market is bullish after the December rate cut is in effect, the investment case for megacaps is further strengthening.
However, despite an overall positive outlook, Lee acknowledged that several risks may impact market performance. For instance, he was of the view that the newly formed Department of Government Efficiency (DOGE) could potentially lead to reduced government spending and slower economic growth if it is too effective in cutting costs. Furthermore, the implementation of tariffs poses another concern, as tariffs can adversely affect corporate profits and financial conditions. Lee’s pointing out of historical patterns showed that after two years of considerable gains, markets are prone to decline in the latter half of the third year.
Our Methodology
We sifted through stock screeners, online rankings, and ETFs to compile a list of 40 blue chip companies with a 10-year revenue compound annual growth rate (CAGR) between 7%-15%. We then selected the top 12 stocks most popular among elite hedge funds. We sourced hedge fund data from Insider Monkey’s database. The stocks are sorted in ascending order of the number of hedge fund holders that have stakes in them, as of Q3 2024.
Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Eli Lilly and Company (NYSE:LLY)
10-year Revenue CAGR: 7.25%
Number of Hedge Fund Holders: 106
Eli Lilly and Company (NYSE:LLY) develops, manufactures, discovers, and sells pharmaceutical products. These products span oncology, diabetes, immunology, neuroscience, and other therapies. The company is one of the best stocks to buy in the pharmaceutical industry, and management expects a 32% revenue growth in fiscal 2025.
It has a solid oncology segment, weight loss therapies, and medications approved for eczema and Alzheimer’s disease that are anticipated to improve the company’s fundamentals. In fiscal Q3 2024, the company grew its sales by 20% to $11.4 billion. Several of its products generated more than $1 billion in revenue, including Zepbound ($1.3 billion) and Mounjaro ($3.1 billion), its top GLP-1 drugs. Strong US demand for these two drugs caused a 42% surge in the company’s revenue in fiscal Q3 2024. Zepbound was approved as a treatment for moderate to severe sleep apnea last year, which is a significant milestone for the company and is expected to be a catalyst for more revenue growth for Eli Lilly and Company (NYSE:LLY) in the near future.
Investors are thus bullish on Eli Lilly and Company (NYSE:LLY) due to its in-demand GLP-1 drugs, which are still in their early growth stages, and the company’s strong financials.
Overall, LLY ranks 6th on our list of the 12 best stocks to buy in 2025 for beginners. While we acknowledge the potential of LLY, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than LLY but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.