Three Unglamorous but Promising Stocks to Watch in 2025

Following a red-hot rally in 2024, US tech giants and artificial intelligence (AI) favorites have been retreating since mid-December. Now might be the perfect opportunity to go hunting for potentially undervalued stocks.

Wells Fargo recently put together a list of 31 stocks it believes offer “above-average growth potential”. The companies span eight of the 11 S&P 500 sectors, with consumer discretionary and information technology accounting for the largest proportion. 

Here are three of Wells Fargo’s choice to keep an eye on this year: DexCom [DXCM], Ecolab [ECL] and SBA Communications [SBAC]. 

DexCom

The Healthcare Play

Source: Stockanalysis.com 

DexCom is a maker of continuous glucose monitoring (CGM) systems that help people with diabetes to manage their blood sugar levels.

As of May last year, DexCom was the CGM market leader, with a 40% share, or approximately 2 million users, according to research by John Hanks, Professor of Biomedical Engineering at Texas A&M. 

Abbott [ABT] was the second biggest, with a 35% share, or approximately 1.7 million users, while Medtronic [MDT] was third, with a 25% share, or approximately 1.2 million users.

Despite its dominant position in the CGM market, DexCom’s share price has struggled to recover after enduring its worst day on record following its Q2 2024 results back in July. 

DexCom CEO Kevin Sayer said in the Q2 earnings release that fewer customers and fewer dollars per customer meant the company failed to meet its “high standards”.

The DexCom share price is down 36.66% in the past year through January 14 to $79.17, and down 30.59% in the past six months. Despite concerns about weak growth crippling the stock, Wells Fargo analyst Lawrence Biegelsen raised his price target to $94 from $90 in December, an upside of 18.73% from the most recent closing price.

Ecolab

The AI Energy Efficiency Play

Source: Stockanalysis.com

Ecolab is a provider of energy, hygiene and water technologies. As well as offering customers cleaning and infection control products, it helps them to meet sustainability goals, particularly when it comes to improving their water consumption and efficiency. 

In October, Ecolab announced a partnership with data center owner Digital Realty [DLR] to pilot an AI-powered water conservation solution at 35 of its data centers across the US. 

“AI is not just revolutionizing business; it’s also set to transform water and energy efficiency within the tech sector,” said Ecolab Senior Vice President and Chief Sustainability Officer Emilio Tenuta in a press release. 

Following its Q2 results in July, the company launched One Ecolab, an initiative to boost sales by expanding the use of digital and AI technologies.

The Ecolab share price has gained a modest 18.74% in the past 12 months to $229.72, though it is down 4.5% in the past six months. Wells Fargo analyst Jason Hass sees potential for it to run up further, raising his price target from $270 to $295, an upside of 26.12%. 

SBA Communications 

The 5G Infrastructure Play 

Source: Stockanalysis.com

SBA Communications is a real estate investment trust with a portfolio of wireless infrastructure assets. 

It is poised to benefit from wireless carriers around the world needing to upgrade their networks. Alongside with its Q3 2024 results at the end of October, the company announced it is enhancing its presence in Central America with the acquisition of more than 7,000 sites from Millicom International Cellular [TIGO]. 

The sites — located in El Salvador, Guatemala, Honduras, Nicaragua and Panama — are expected to contribute approximately $129m in revenue and $89m in tower cash flow in their first full year of operations. SBA has also inked a seven-year exclusive deal with Millicom to build up to 2,500 new sites. 

“As a result of this transaction and the strength of our existing portfolio in the region, we will be the leading tower company across all of Central America,” said CBA President and CEO Brendan Cavanagh in the Q3 earnings release. 

Although SBA missed Q3 revenue expectations, it raised guidance for its full-year adjusted funds from operations to a range of $13.20–13.45 per share. 

The SBA share price’s most recent close of $195.02 on January 14 is just 6.2% above its 52-week low of $183.64, set on May 1, 2024. Nevertheless, Wells Fargo analyst Eric Luebchow raised his price target on the stock from $220 to $240 in October, an upside of 23.06%.

Conclusion

DexCom, Ecolab and SBA Communications may not be names that have registered on every investor’s radar. However, all three are showing promise for the year ahead.