Drivers of 2024: Which of them can continue to grow this year?

The year 2024 brought extraordinary gains to the stock markets, especially for some large companies that experienced literally meteoric growth. While many other companies have struggled with uncertainty and a volatile economy, several stalwarts have managed to deliver triple-digit gains for investors. This success raises questions about what was behind their phenomenal growth and whether they can continue to ride it out in 2025.

In the following, we look at the main factors that catapulted them to the top and try to estimate their future potential.

Sea Limited $SE

Sea Limited, the giant operating in Asia, has experienced a textbook turnaround. After two years of significant share price declines, 2024 came and saw the stock rise by a staggering 162%. The main driver of growth was accelerated revenue momentum, which grew 25.6% year-on-year in the first nine months of the year.

This company is built on three pillars: video games, financial services and e-commerce. Meanwhile, the e-commerce segment has seen the strongest growth, thanks to strategic investments in marketing at the end of 2023. Despite an 11% reduction in advertising spending in Q3 2024, growth continues, indicating the effectiveness of earlier investments. The result is not only revenue growth but also improved profitability, making Sea Limited a strong candidate for continued growth in 2025.

Axon Enterprise $AXON

Axon Enterprise, best known for manufacturing tasers and cameras for the police, has expanded into new segments in 2024. Examples include its entry into the drone market, which has been used in natural disaster management, or its collaboration with Loomis on security solutions.

Axon is showing impressive growth in revenues, which grew by 32% in 2024 and crossed the $2 billion mark. This growth is all the more impressive because the company still sees huge potential in untapped markets. On the other hand, Axon's stock trades at 24 times annual revenue, well above its three-year average. That could mean a risk of a correction in 2025.

Spotify $SPOT

Spotify Technologies was able to reach new all-time highs in 2024 and recover its value after a big drop in 2021 and 2022. The key to its success was increasing subscription prices and user growth. The number of premium users grew 12% year-on-year to 252 million, which was positively reflected in profit margins.

The company achieved record gross and operating margins, confirming its strong financial position. However, the price increases and cost reductions that contributed to profitability are not sustainable over the long term. As a result, growth may slow in 2025.

Who has the most potential in 2025?

Although Axon and Spotify have shown great performance, Sea Limited appears to be the most promising going into 2025. The company is benefiting from growth in all three major segments, and its valuation is relatively low - the shares trade at just four times earnings. The combination of dynamic growth, efficient use of investment and expanding profitability makes Sea Limited a clear favourite for this year.

Disclaimer: There is plenty of inspiration to be found on Bulios, but stock selection and portfolio construction is entirely up to you, so always conduct a thorough analysis of your own.

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