2 Bargain Stocks That Could Soar in 2025

The S&P 500 is up 69% since bottoming in 2022, but the stocks of some industry-leading companies are still trading in the bargain bin.

The following companies were flying high along with the broad market just a few years ago, yet their share prices have yet to recover and remain at multiyear lows. Here's why these beaten-down stocks can rebound in 2025.

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1. Alibaba

The sluggish post-pandemic economy in China has weighed on sales for Alibaba Group (NYSE: BABA), which is home to the popular e-commerce marketplaces, Taobao and Tmall. The company generates revenue from its e-commerce operations and also a logistics operation, cloud computing division, and entertainment segment, among others. But after regularly delivering high double-digit top line growth for years, it began reporting declining revenue in 2022. Growth has rebounded somewhat with revenue increasing 5% year over year in Q3 2024.

Fortunately, China's e-commerce market is expected to climb 47% to $1.7 trillion in the next three years, according to Statista. The Chinese government has also taken several measures to boost its economy in recent months, which should begin having an effect on the region in 2025. As China's largest e-commerce and cloud services provider, Alibaba should be among the chief beneficiaries.

While Alibaba is already the market leader there, it's also seeing success overseas where revenue from international commerce grew 35% year over year in the most recent quarter, driven by strong gains from the AliExpress and Trendyol platforms. Alibaba Cloud also appears to be in a solid position after reporting triple-digit growth for artificial intelligence-related products last quarter.

Alibaba remains a large and profitable company, and it generated $12 billion in trailing-12-month net income on $134 billion of revenue. With the stock trading at just 11 times this year's earnings estimate, investors are getting a bargain that could deliver handsome gains in 2025 and beyond.

2. Wayfair

The U.S. housing market has been hobbled by rising interest rates, but as borrowing rates stabilize, housing activity is starting to pick up again, which could be great news for the leading online home goods seller, Wayfair (NYSE: W).

The company was averaging around 40% annual revenue growth until demand for home goods collapsed along with the housing market. Wayfair's revenue plummeted, but sales trends are stabilizing. In the most recent quarter, the company posted a revenue decline of just 2% from the year-ago quarter, which still reflects a weak home spending environment but shows the company is on the verge of returning to growth.

The business is in a better financial position, too. Management has been making decisions that are improving its cash flow. For example, it recently exited Germany in order to focus on more favorable growth prospects in the U.S., Canada, U.K., and Ireland. Wayfair returned to positive free cash flow last year, positioning the business for profitable long-term growth.

While Wayfair lost a small number of active customers last year, it still has a large customer base of more than 21 million. Moreover, these customers spent slightly more on goods in Q3 with average order value increasing 4.4% year over year to $310.

These positive trends are pointing to a strong rebound for the business as the housing market recovers. The stock's price-to-sales multiple has settled around 0.5 over the last two years. In a growing home goods market, the stock offers significant upside for investors.

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John Ballard has no position in any of the stocks mentioned. The Motley Fool recommends Alibaba Group and Wayfair. The Motley Fool has a disclosure policy.