Citi revamped its list of highest conviction stocks going into 2025. These names made the grade

Published Fri, Dec 27 20248:08 AM EST

As the new year approaches, investors should keep an eye on some stocks that could outperform over the next 12 months, according to Citi. It has already been a strong year for stocks with all three major averages posting sizable gains. The tech-heavy Nasdaq Composite has seen the most of all, rising more than 33% year to date. That's followed by the broad market S & P 500 at more than 26%, and then the blue-chip Dow Jones Industrial Average at about 15% year to date. In light of this backdrop, Citi updated its focus list of bottom-up, highest conviction ideas for North America. According to the firm, the list has delivered an absolute return of 26% during a three-month period and 37.5% return during a six-month period. Now looking to 2025, the firm updated its list with additions such as AT & T and Boston Scientific while removing some names such as Cheniere Energy and Atlassian . "An early theme related to '25 is earnings growth rate convergence," Citi U.S. equity strategist Scott Chronert said in a recent note to clients. "This too plays to both broadening and stock selection with investors increasingly looking down cap for incremental alpha opportunities." Here are the stocks that came up on the list. While newly added AT & T has ticked lower in December, shares have outperformed the broader market in 2024, posting year-to-date gains of almost 37%. Citi, which has a buy rating on the name, thinks shares can keep rising, as its price target of $28 implies about 22% upside potential from Thursday's close. Citi analyst Michael Rollins said the market is underappreciating AT & T's opportunity to sustain strong annual performance in its mobility segment and expand financial contributions within its consumer wireline segment. Additionally, he anticipates the company's service revenue growth will increase to 2.4% year over year and even sees more upside ahead when looking at fiscal 2026 and 2027. "AT & T has a multi-year opportunity to deepen its focus on converged mobile + broadband services and improve financial performance," he wrote. "Potentially positive catalysts for multiple expansion include the prospects to sustain annual service revenue growth, expand EBITDA margins, and return capital to shareholders at an elevated pace beginning in the 2H25." Boston Scientific, another new name on the list, has soared even higher this year. In 2024, the medical device maker's shares have risen more than 58%, and Citi expects the coming months to bring even more upside, with its $107 target reflecting 17% upside ahead. "Boston Scientific continues to ride the momentum of several key product and portfolio launches, most notably its pulsed-field ablation (PFA) solutions including Farapulse and Farawave," analyst Joanne Wuensch wrote. She thinks the company is positioned to bring in both double-digit revenue growth and earnings per share growth. BSX YTD mountain BSX, year-to-date Video game publisher Take-Two Interactive could also see more gains next year. With several releases on deck over the upcoming quarters, including Grand Theft Auto VI , analyst Jason Bazinet expects growth will only accelerate from here. The stock has jumped more than 16% in 2024, and the analyst's target of $225 implies around 20% upside, as of Thursday's close.