Motley Fool Hidden Gems Investing - Can These Three 2025 Winners Keep Winning?

Starting point is 00:00:00 Winners keep winning, right? You're listening to Motley Fool Money. Welcome, fools. I'm your host, Tim Byers, and with me are two of my supernova colleagues, Alicia Alfieri, and Keith Speich. Friends, we are here to review some big winners from 2025. It's three of them, Micron Technology, ticker MU, Robinhood Markets, ticker HOOD, and Newmont Corp., or the former Newmont Mining, ticker NEM. These were all fully caffeinated stocks this year, producing remarkable returns for those who've held. Today, we're going to talk through each of them and make a prediction about whether these winners can keep winning, because as David Gardner likes to tell us, winners tend to keep winning. Do these fit

Starting point is 00:01:09 into that mold? If so, what will winning look like? Keith, Alicia, are you ready to dive you fully caffeinated? You ready to go? Absolutely. Yeah, ready. All right. Well, let's do it. We're going to start with Micron, Micron Technology. Will Micron beat the market again in 2026? Let me tell you, this was a big year for the maker of memory technology. These are memory chips. Anytime you have chips that do processing and you have chips that help to take the data that you are going to do some processing and store that data, make that data available. That's what memory does. Micron outperformed the market by about 143% year-to-date. That is

Starting point is 00:01:58 outrageous. There's some reasons for this. I'll give you some overview. The financials for fiscal 2025 so far, we can see revenue jumping to 49%, or this is what the projections are, for $37.4 billion. Gross margins expanding to over 40%. Really, really big numbers. We also have huge returns in terms of high bandwidth memory. This is a kind of technology that Micron has been leading the market in. The best way I can describe high bandwidth memory, Alicia, is you take memory chips and you stack them. You make them like a little tiny skyscraper on your motherboard, and they work together. They are pretty crucial for data center build-out and AI build-out. There has been a lot of demand. Before I kick it

Starting point is 00:03:00 to you here. Let me give you this. CEO Sandre Marotra said that all HBM capacity was sold out for both 2024 and 2025, with 2026 mostly already committed. That sounds pretty good, Alicia. When you look at Micron, what did you see for 2025 so far, and what's your prediction for 2026? Does it beat the market again? Back in March of 2024, I think leadership forecasted that the company was going to be a big beneficiary of AI. They were right. Revenues have grown, margins expanded, profitability grew, including its ability to produce free cash flow, which doesn't always happen in a cyclical industry. This growth was due to the massive demand for memory, as you said, thanks to the huge data center demand. Plus,

Starting point is 00:03:57 the supply of memory tech was pretty tight this year. And oh, by the way, Micron is a key supplier for NVIDIA's Blackwell GPU. That said, so if we're talking about next year, so I think that AI-fueled data center demands are going to continue. The trend is strong. But I think for this company, the valuation expectations are a bit tricky. Right now, they're at 100 times price-to-free cash flow. Not the best and not the worst it's been, but pretty pricey and it sets up pretty high expectations. We're only talking about one year here, so that doesn't give the company really a lot of time to grow into that valuation. If we were looking at a longer timeframe, that would be different. Lots of expectations baked in and we know how the market

Starting point is 00:04:44 reacts when its hopes are dashed with high-flying stocks. Add to that the capacity build, which should help the company in the long-term, but will take some time. I think this company won't beat the market next year. Coming short. Keith, let me give you some more data here, and we'll see if you agree or disagree. Fiscal Q4 of 2025, total high bandwidth memory revenue was up to $2 billion. The annual run rate on this looks like $8 billion. This is a big piece of the business. Also, data center revenue reached about 56% of total company revenue, with gross margins of 52%. That's pretty good. Also, the cloud memory business unit revenue increased by 257%. These are some pretty meaningfully impressive growth rates.

Starting point is 00:05:45 So, is it that this company is maybe priced at a premium? What do you think here? You know, Tim, I actually still view Micron as one of the most underrated AI infrastructure stocks out there, despite its huge gain in 2025. You mentioned it. I mean, you hit the nail on the head. Memory is absolutely critical to AI. In fact, it was just a few months ago that NVIDIA's CEO called out Micron and mentioned that the company's high-performance memory was, I think he said, invaluable to helping NVIDIA drive the next generation of the AI breakthroughs that it's working on. So, I don't think he was exaggerating. I think the HBM is that critical to AI infrastructure. And it's important to remember Micron is one of only

Starting point is 00:06:30 three suppliers of high-bandwidth memory. There are two Korean companies, Samsung and SK Hynix, But especially with the current trade climate, I think it's key that Micron is the only member of that group that's based in the U.S. So I think that's a big plus for Micron. You would think that a U.S. company that plays such a pivotal role in the ongoing build-out of AI infrastructure would command a premium valuation. That's to be expected. But I do think Micron is still cheaper than a lot of the other AI infrastructure stocks around. And so I think that's a plus for it. in terms of prediction for next year, I'm going to differ with Alicia a little bit. First of all, I don't think that Micron will deliver the kind of gains that it's done in 2025 and 2026. I don't

Starting point is 00:07:14 think we're going to see anywhere close to a repeat performance of that. But that said, I do predict that the stock will beat the market next year. But my prediction assumes a couple of things. One, that the AI infrastructure boom will maintain its momentum going into the new year. I think that's a relatively safe assumption at this point. It could be proven wrong. But I'm also assuming that Micron will still be able to price its memory at a premium. HBM pricing, as you mentioned, is set in advance. That shouldn't be an issue. A lot of it's already booked for 2026. But Micron's management also believes that its non-HBM products will enjoy higher pricing and improve margins next year due to strong demand and supply constraints. So those dynamics could change, but I suspect that

Starting point is 00:07:56 Micron's pricing power will continue into next year and will help this stock edge the market. All right, great. So Alicia gives it thumbs down. Keith says thumbs up. Up next, we're going to talk about Robinhood Markets. You're listening to Motley Fool Money. to keep your day moving or go with the flow and choose ginseng delight our new double espresso with ginseng extract whatever lies ahead don't change your morning let your morning change you discover coffee plus on espresso.com all right we are back we're looking at the big winners from 2025 and will they beat in 2026 and it's time to talk about robin hood markets this is uh i think we can fairly say, a fairly rebellious provider. It's a trading platform. I think of Robinhood,

Starting point is 00:09:01 Keith, as one that's maybe less about trading stocks, although it did start as a stock trading platform, as a mobile-first, zero-fee discount brokerage. It got a lot of momentum. But I think it's since grown into providing a lot of access for common investors to alternative assets. We're talking about crypto. We're talking about prediction markets. We're talking about precious metals. We're talking about options. We're not really just talking about equities here. I have to say, Robinhood was included in the S&P 500 this year. Overall, it outperformed the market by, as of this recording, over 176%. That is massive. There have been some really big numbers here. Total earnings per share so far, this according to Gemini, up over 259%. That was for

Starting point is 00:10:08 Q3 of 2025. Crazy assets. Total platform assets up to $333 billion. That was up 119% year over year. the average assets per customer doubled to over $10,000. So, Keith, when you look at Robinhood, what do you see? Is this a business that you think continues to beat the market in 2026? Yeah, well, I'm going to ask you a question and Alicia a question first, all right? All right. Do you know what the opposite of Murphy's Law is called? I have no idea. So, this is interesting. Tell me. Yeah, okay. So, I didn't know either, but I was thinking about Robinhood in this context because I think for Robinhood, it's experienced the opposite of Murphy's Law this year. And so,

Starting point is 00:10:53 I found out the opposite of Murphy's Law is Wyprum's Law. It's Murphy spelled backwards, all right? So, I think that Robinhood has experienced Wyprum's Law this year. Nearly everything that could go right for Robinhood went right for Robinhood. Now, I do not want to imply that Robinhood has, you know, only benefited from good things that just happened. The company has made some really smart strategic moves, including the acquisition of Bitstamp, expanding into the prediction of futures markets, like you mentioned, Tim. You know, there are some legitimate criticisms of this company and its platform. You know, I think making investing feel like a game could be a bad thing in some ways, right? I mean, you know, I mean, this is serious business. But I do

Starting point is 00:11:39 appreciate that Robinhood has attracted people to investing who might not have been interested otherwise. I think that is absolutely a net plus for this company. In terms of what I think is going to happen next year, there's a downside to having a year where almost everything goes right. It's nearly impossible to repeat it. And there's also a downside to having a nosebleed valuation, which Robinhood does have. And so, I don't think Robinhood is going to come anywhere close to delivering a 200% plus gain in 2026. I just do not think that's going to happen. but the stock could still beat the market next year. I'm going to put a big if in there. If the stock market performs well and if crypto markets perform well. I realize Robinhood

Starting point is 00:12:28 isn't totally, they have diversified. They're not totally dependent on either one of those, but the problem is that if that momentum doesn't continue, it makes it much more challenging, much more difficult for Robinhood to beat the market. I think it's a coin toss at best. as to whether or not Robinhood beats the market. But I'm an optimist by nature. I'm going to predict that Robinhood will beat the market, but I could easily be wrong on this one. So, Alicia, let me give you some other thoughts here. So, revenue growth increased 100%. This was $1.27 billion in Q3 2025. That's a crazy increase. There were 11 businesses inside of Robinhood, generating at least $100 million in annualized revenue. That is also

Starting point is 00:13:20 pretty insane. And what Keith mentioned here, cryptocurrency revenue up 339%. So where do you land on this company? And let me give you one more thing. They are introducing something called Robinhood Legend, which I personally kind of hate. But they are going after high-value active traders. Moving from a beginner's app to a much more advanced, high-value, big-money type of customer, does that entice you? Do you think, hey, looking at this, I see this as a 2026 market beater? I have to say, I find Robinhood very interesting. Diversification for them has been key. That's not surprising, considering the last time the market dipped in 2022, Robinhood's revenue fell something like

Starting point is 00:14:13 25% year-over-year. More recently, the company has expanded its offerings. Not only is there serious optionality with this brand, there's also a push into diversification so that the company isn't so tied to retail investors like you and I, and how the overall market does. I also saw an article that referred to Robinhood as Gen Z's Schwab. I'm not sure if that's true, but I'd say that it's more than that because of things like this prediction market trading, which the company is expanding to have NFL prop bets and parlays. So that kind of makes me think it's Schwab meets maybe DraftKings. And I don't know if Robinhood is really understood by Wall Street for what it is, what it's becoming, or what it could be. And so I think it's really

Starting point is 00:15:07 tricky for people to gauge what they're worth and why. So equities and options for Robinhood are still about, or were about, 30% of their revenues in the third quarter. If you throw crypto in there, the full transaction revenues accounted for 57% of revenues. That means they're still very much dependent on the retail trader, which means if there's a downturn or substantial volatility that scares investors out of the market, a good chunk of Robinhood's revenues would be at risk. I largely agree with Keith. It depends on what the market does, I think. But I'm going to be difficult. I'm going to be different. And I'm going to say they're going to underperform here because if we continue to see market volatility, if we have

Starting point is 00:15:55 a downturn, again, they have a lot of their revenues that are at risk. But if that is true and the valuation gets more attractive, I might look at them a little closer because I think this is an understood company. And I kind of love misunderstood companies, rather. Fair enough. All right. So we have some conditional, maybe middle of the road. It's not quite thumbs up, not quite thumbs down. Very conditionalized on this one, which I understand. A misunderstood company. Up next, we're going to talk gold mines. You're listening to Motley Fool Money. All right, fools, let's end with Newmont Corporation, ticker NEM. This one is an interesting one. They're out here in Colorado. As most Fools know, I'm out in Colorado. Newmont was

Starting point is 00:16:48 spectacular in 2025, Alicia, beating the market by more than 143%. Honestly, it's like people love their gold and people love gold and gold prices, uh, were, were up the, the realized gold price was, I, I, this is according to the most recent reported data that I pulled from Gemini $3,539 per ounce was a 41% year over year. So what do we think about this? I mean, do we, should we be paying more attention to the mining companies? Because man, I mean, Newmont Mining really crushed it this last year. What do you think? Yeah, I think they really did crush it. I'm going to lead with my strongest statement here. I think it's a beat for next year, too. Newmont benefits from a few different trends. First of all,

Starting point is 00:17:44 it's the world's largest gold miner. That's also an under-the-radar AI play through its copper mining as well, since data centers use copper. Also, people often flock to gold when the economy gets a bit uncertain. I like what I've been seeing in terms of what they've been doing with their increased fortunes. They had a third quarter record of $1.6 billion in free cash flow, which was the fourth consecutive quarter of free cash flow generation for the company. They're paying down their debt, returning value to shareholders with buybacks, and they have cost savings initiatives that are in place. On top of that, the valuation isn't bad. I think it's at about 17 times price to free cash flow. Any guesses as to what that valuation multiple goes

Starting point is 00:18:32 to during a recession? Much higher. All right. Newmont beating the market. Keith, where are you at? I'll just say, let me tee you up with this one. Newmont used a lot of that free cash flow to essentially retire all of its debt. They have really cleaned up that balance sheet. Where do you stand on Newmont? I have not followed Newmont as closely as I have the other two stocks we've discussed. But I do know one thing about this company. It performs well when the demand for gold is high and the demand for gold has skyrocketed. And the company is in a stronger position than it's been in the past. You mentioned lowering the debt. They've got a new mine that's a more profitable source of gold. So, I do like the direction Newmont is

Starting point is 00:19:18 headed. Also, I totally agree with Alicia on copper. I mean, I think that's kind of a bonus with Newmont that a lot of people might not realize. Copper is often found along with gold, so it makes sense that Newmont would be a big player in the copper industry. And importantly, as Alicia mentioned, copper is in demand in AI data centers. It's a great electrical conductor. It can manage the heat from AI servers effectively. So, that's a good little plus for Newmont. Now, granted, copper only makes up around 7% of the company's total revenue, So, it isn't a huge factor with the company's performance, but 7%, you know, that's not insignificant. As far as what this stock will do next year, honestly, to predict how Newmont

Starting point is 00:20:00 will perform, you pretty much have to predict what's going to happen globally from a macroeconomic and geopolitical standpoint, because its fortunes are just intertwined with those things. My best guess is that we're still going to have plenty of geopolitical uncertainty in 2026. I'm not that optimistic that I don't think that's going to go away. I suspect we'll see perhaps greater impact from the Trump administration's tariffs next year. If I had to guess, I would say that the U.S. economy won't be exceptionally strong. I don't think it's going to tank either, but I don't think it's just going to boom. In this kind of environment, gold prices would probably increase at least moderately.

Starting point is 00:20:38 I don't know that they would soar, but I think they would at least rise somewhat. I think that's going to translate into Newmont beating the market again. in 2026, albeit with lower gains than it delivered this year. So, two thumbs up for Newmont on beating the market. All right. Well, Keith, Alicia, thank you for joining me. We're pre-recording this, but this is for our December 22nd show. We have a whole bunch of shows looking back to look forward. So, thanks for looking back to look forward with me. Fools, remember, tomorrow, we have Emily Flippen and Jason Hall and Jeff Santoro with an economic day to catch up. There's a bunch of delayed labor and business surveys,

Starting point is 00:21:18 plus the consumer price index that are our first wave of real economic releases are now out. And this is the first time we've really been able to look at this since the shutdown. So Emily, Jeff and Jason are going to look at that in tomorrow's show. And as always, people on the program may have interest in the stocks they talk about and the Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear. All personal finance content follows Motley Fool editorial standards and is not approved by advertisers. Advertisements or sponsored content provided for informational purposes only. To see our full advertising disclosure, please check out our show notes. Well, that's it for today's show.

Starting point is 00:22:03 Thank you for joining us here. Thanks especially to Alicia and Keith, our engineer today. As always, it's the incomparable Dan Boyd. Our producer is Anand Chakraborty. I am your host, Tim Byers, and we will see you again next year, fools. Happy New Year. Happy holidays. And thanks for being a member of The Motley Fool. We'll see you again soon.

Motley Fool Hidden Gems Investing - Can These Three 2025 Winners Keep Winning?

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