Breaking the Mold: 3 Non-Tech Stocks Ready to Surge in 2025

Key Points

• Cleveland-Cliffs is strategically positioned to benefit from a potential increase in demand for domestically produced steel and infrastructure projects.
• Lennar Corporation is evolving its business model, spinning off its land holdings to focus on homebuilding and making acquisitions to expand its operations.
• Carnival Corporation is experiencing a strong resurgence in demand, evidenced by record bookings and significant revenue growth across its global brands.

 

Investors have been primarily focused on technology stocks in areas such as artificial intelligence (AI), high-performance computing (HPC), and renewable and nuclear energy. However, other sectors offer compelling opportunities for those seeking a more diversified portfolio. Three non-tech stocks are poised for growth in 2025 due to a combination of industry-specific trends and unique company strengths. These three companies present compelling investment opportunities with the potential for significant returns.

Cleveland-Cliffs Inc.: A Look at Steel in 2025

Cleveland-Cliffs Inc. NYSE: CLF is a major player in the North American steel industry. As a vertically integrated operation, it encompasses all aspects of the iron processing industry, from mining iron ore to producing pellets, direct reduced iron, and ferrous scrap. This vertical integration allows Cleveland-Cliffs to control its supply chain and optimize production costs. 

Cleveland-Cliff’s earnings report for the third quarter of fiscal year 2024 (Q3 FY2024) revealed revenue of $4.6 billion, a decrease from $5.1 billion in the prior quarter. The company posted a GAAP net loss of $230 million, or $0.52 per diluted share, and an adjusted net loss of $156 million, or $0.33 per diluted share. The adjusted EBITDA for the quarter was $124 million. These results were impacted by several factors, including weaker demand, pricing pressures, and idling of the company's Cleveland #6 blast furnace. Despite these challenges, Cleveland-Cliffs achieved its lowest unit cost since 2021 and maintained liquidity of $3.8 billion as of September 30, 2024.

Cleveland-Cliffs finalized its acquisition of Stelco, a Canadian steel producer, on November 1, 2024. Stelco reported an adjusted EBITDA of US$64 million and a 13% margin in Q3 FY2024. This acquisition diversifies Cleveland-Cliffs' business beyond the automotive sector, providing access to low-cost assets and strengthening its market position.

Additionally, Cleveland-Cliffs appointed seasoned finance executive Jane M. Cronin to its Board of Directors, expecting her expertise to enhance the company's financial strategy and corporate governance. The company also lowered its 2024 capital expenditure outlook to $600-$650 million and anticipates approximately $600 million in capital expenditures for 2025.

Lennar Corporation: Building for the Future

Lennar Corporation NYSE: LEN is one of the largest homebuilders in the United States. The company engages in the construction and sale of single-family homes, as well as land development, financial services, and multifamily property management. Lennar operates in 26 states, primarily under the Lennar brand, and serves a wide range of buyers, from first-time to luxury homebuyers.

Lennar’s earnings report for the fourth quarter of fiscal year 2024 (Q4 FY2024) stated net earnings of $1.1 billion, or $4.06 per diluted share. However, new orders decreased by 3% to 16,895 homes, and deliveries decreased by 7% to 22,206 homes. Total revenues for the quarter were $9.9 billion, with a gross margin on home sales of 22.1%. For the full fiscal year 2024, Lennar reported net earnings of $3.9 billion, or $14.31 per diluted share, with new orders increasing by 11% and deliveries by 10%. Total revenues for the year were $35.4 billion. 

The company is actively pursuing a strategic shift towards an asset-light, land-light business model. As part of this strategy, Lennar plans a spin-off of its subsidiary, Millrose Properties, Inc., which will operate as an independent, publicly traded land company. This move is expected to enhance Lennar's financial flexibility and focus on its core homebuilding operations.

Additionally, Lennar has acquired Rausch Coleman Homes, which is expected to contribute approximately 4,000 deliveries in 2025. This acquisition will expand Lennar's market presence into new and desirable markets in Arkansas, Kansas, and Missouri while also growing its existing operations in Texas, Alabama, Oklahoma, and Florida. For the first quarter of 2025, Lennar projects to deliver between 17,000 and 17,500 homes, with a gross margin between 19.0% and 19.25%. For the full year 2025, the company expects to produce between 86,000 and 88,000 homes, including the contribution from Rausch Coleman.

Carnival Corporation: Navigating the Waters of Recovery

Carnival Corporation NYSE: CCL is a global cruise company and one of the largest leisure travel companies in the world. It operates a fleet of cruise ships under various brand names, including Carnival Cruise Line, Princess Cruises, Holland America Line, Seabourn, P&O Cruises, Costa Cruises, AIDA Cruises, and Cunard. Carnival's ships visit approximately 700 ports worldwide and offer a wide range of cruise experiences. 

Carnival ended the year strong with record revenues of $25 billion, which was a 15 percent increase from last year, according to the company's full-year 2024 earnings report. The company's net income for the year was $1.9 billion, with an adjusted EBITDA of $6.1 billion, a 40% increase from the previous year. Operating income for the year was $3.6 billion, an 80% increase year-over-year.

In the fourth quarter of 2024, Carnival reported a net income of $303 million and an adjusted net income of $186 million, driven by higher ticket prices and onboard spending. The company's revenue for the quarter was $5.9 billion, a 10% increase from the same period in 2023. 

Looking ahead to 2025, Carnival projects an adjusted net income of approximately $2.3 billion and an adjusted EBITDA of roughly $6.6 billion. The company is also focused on sustainability, having reduced its greenhouse gas emissions by 11% from its 2011 peak and achieved a 44% reduction in food waste per person from its 2019 baseline.

Something Other Than Tech

Cleveland-Cliffs, Lennar, and Carnival represent compelling investment opportunities in sectors beyond the highly publicized AI space. Each company possesses unique strengths and is positioned to benefit from favorable industry trends. Cleveland-Cliffs is poised to capitalize on potential infrastructure spending and its diversified steel production capabilities. Lennar is well-positioned to address the ongoing housing shortage with its strategic shift to an asset-light model and focus on volume growth. Carnival is riding the wave of a strong recovery in the cruise industry, supported by record bookings and a commitment to enhancing the customer experience. While each company faces its own set of challenges, their growth prospects make them attractive considerations for a diversified investment portfolio in 2025.