2 Comeback Stocks to Buy Before 2025

The stock market has been on a tear over the past year. All the top market indexes surged to new highs recently, but there are some notable names trading at discounts. Here are two stocks trading well off their highs that could rebound over the next year.

1. Nike

Nike (NKE 0.18%) is a top brand in a growing athletic wear market, but its share price is trading 50% off its previous peak on weak sales performance. The company is a good bet for a turnaround after it recently hired former company veteran Elliott Hill as its new CEO.

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

Strong demand for Nike’s fitness products are great indicators for the future. The company sees opportunities to simplify the product assortment, which could help funnel more investment into best-selling products like running shoes and fitness apparel.

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

Nike is a large company with deep pockets to invest in new products and innovation, particularly in cushioning technology for footwear, while still paying shareholders a dividend along the way. Its trailing dividend yield of 1.67% is the highest in 15 years, which highlights the value in the shares right now.

Nike is making good progress on cost reduction and shifting its product assortment 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% over the last three months and could have more room to run.

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

Roku’s growth could accelerate further over the next few years, as management starts leaning into new ways to monetize its users. For example, it is leveraging its own payment service Roku Pay to simplify the sign-up process for premium streaming services offered on the platform.

Roku is also leaning more heavily into partnerships to drive growth in its advertising business. It recently partnered with The Trade Desk, a technology platform that helps brands buy and manage ad campaigns. This partnership will help third-party brands have better data about Roku’s viewers, and therefore potentially accelerate growth in Roku’s advertising revenue.

Roku has a lot of untapped potential in a connected TV advertising market estimated to reach $38 billion in 2024, according to GroupM. Investors can buy shares 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.

John Ballard has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nike, Roku, and The Trade Desk. The Motley Fool has a disclosure policy.