We recently compiled a list of the 12 Best Multibagger Stocks to Buy Right Now. In this article, we are going to take a look at where FTAI Aviation Ltd. (NASDAQ:FTAI) stands against the other multibagger stocks.
The US equities continued their upward movement in 2024 and fueled the S&P 500 to record highs. Much of this optimism in the broader market was backed by the strong US economy and the Federal Reserve’s stance to cut interest rates. As per PBS News, 2024 saw several familiar winners, like big technology stocks. These stocks got even bigger due to continuous increases in their stock prices. Apart from certain tech giants, strong momentum was also seen in Bitcoin, gold, and other investments.
Performance of US Equity Markets in 2024- A Recap
Ameriprise Financial reported that 2024 had a strong start, with the S&P 500 Index concluding the Q1 on a high note due to a healthy US economic backdrop, moderating inflation, improvement in profit conditions, and anticipations of rate cuts from the US Fed.
The strong growth momentum continued in Q2 as the S&P 500 Index saw its strongest three-quarter run since mid-2021. Ameriprise Financial highlighted that an AI boom again drove healthy gains throughout IT and communication services. However, increased rates and a pause by the US Fed capped broader market gains. In September, the US Fed reduced its policy rate for the first time since 2020, concluding its aggressive rate-hiking cycle to control inflation. Therefore, it began a new monetary policy stance that supported economic growth and the labor market. Additionally, since the election, investors’ confidence has been further boosted towards risky assets, including equities.
READ ALSO: 7 Best Stocks to Buy For Long-Term and 8 Cheap Jim Cramer Stocks to Invest In.
What to Expect in 2025?
For the S&P 500, J.P. Morgan Research projects a price target of 6,500 next year, with EPS of $270. The US is expected to remain a global growth engine with the expansionary business cycle, healthy labor market, broadening of AI-associated capital spending, and the prospect of strong capital markets and dealmaking activity.
Furthermore, BlackRock sees several factors expected to support stocks in 2025. The decisive election result removed key uncertainty hanging over the broader US market. The rally that was seen after the results might continue into the start of 2025 primarily because of prospects of tax cuts and deregulation throughout key industries. While the impact of some policies remains uncertain, history has a long-term record of positive returns in 1st year of a Presidential term. The firm also believes that earnings and valuations hint at healthy potential for a continued broadening of the market. Its analysis of the S&P 500 data reflects that earnings for Mag 7 stocks outperformed the broader market by 37% in 2023. This earnings gap was narrowed across 2024. Now, it expects it to decline to 7.5% in 2025.
Our Methodology
To list the 12 Best Multibagger Stocks to Buy Right Now, we used a screener to shortlist the stocks that have gained over 100% over the past year and have healthy average upside potential. Finally, the stocks are arranged in ascending order of their average upside potential, as of 30th December 2024. We also mentioned the hedge fund sentiment around each stock, as of Q3 2024.
At Insider Monkey we are obsessed with the stocks that hedge funds pile into. 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).
A team of airline employees surrounded by flight deck controls, with a variety of aircraft outside.
FTAI Aviation Ltd. (NASDAQ:FTAI)
Number of Hedge Fund Holders: 41
One-year Return: ~179%
Average Upside Potential: ~38.3%
Market Cap as of 30th December: $13.7 billion
FTAI Aviation Ltd. (NASDAQ:FTAI) primarily focuses on the acquisition and leasing of aircraft, aircraft engines, and related equipment.
FTAI Aviation Ltd. (NASDAQ:FTAI)’s growth trajectory over the past year stemmed from supply chain disruptions and engine durability issues from major manufacturers, leading to shortages in the aviation sector. FTAI Aviation Ltd. (NASDAQ:FTAI)’s integrated approach to jet-engine leasing and repair has placed it well in addressing these shortages, enhancing its market value. Furthermore, FTAI Aviation Ltd. (NASDAQ:FTAI) entered into a 5-year maintenance service agreement with International Aero Engines AG (IAE) for V2500 engines, covering more than 100 full-performance restoration shop visits.
Why has this agreement fueled investors’ optimism? Well, this agreement solidifies the company’s position in the V2500 engine market and enhances future revenue visibility. With more than 100 full-performance restoration shop visits covered under this agreement, FTAI Aviation Ltd. (NASDAQ:FTAI) can assume consistent revenue and improved capacity utilization in its engine maintenance segment.
As the V2500 engine is being widely used in narrowbody aircraft, this partnership is expected to lead to additional contracts and market share gains in the future.
ClearBridge Investments sees a material upside to the stock on the back of meaningful revenue and earnings growth potential. Here’s what the firm said in its Q3 2024 letter:
“We are encouraged by the high proportion of positive returns on new ideas added over the last five quarters of elevated new idea generation, with solid contributions to overall performance despite their representing a modest portion of the Strategy’s assets.
We continued to deliver strong new idea generation, adding four new investments in the quarter: OneStream (through participating in its IPO), Abercombie & Fitch, Wintrust Financial, and FTAI Aviation Ltd. (NASDAQ:FTAI).
FTAI Aviation is an aerospace company that offers both engine and aircraft leasing services, as well as an aftermarket for engine products and services. With a focus on several widely used and aging engine platforms, the company’s differentiated modular approach to aftermarket products, along with the unique assets from its leasing business, offers meaningful revenue and earnings growth potential.”
Overall FTAI ranks 9th on our list of the best multibagger stocks to buy right now. While we acknowledge the potential of FTAI as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued AI stock that is more promising than FTAI 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.