February 2025 Stock Watch List

As I'm writing this blog post on Friday, January 17th, it's going to reach a high of 40 degrees Fahrenheit here in Central Wisconsin later today. For this time of year, that's a definite heat wave. I'll gladly take it, too!

Now that there are just two weeks left in January, I'm going to take a moment to look ahead to the stocks on my watch list for February 2025.

Stock #1: Amazon (AMZN)

The first stock on my watch list for next month is once again Amazon. This has been a pick that I've been adding to just about every month lately. Interested readers can find my buying rationale in my December 2024 Stock Watch List blog post and my Seeking Alpha article from last November.

AMZN continues to have undeniable catalysts in e-commerce, cloud computing, and digital advertising. The net cash and marketable securities position continues to grow. Best of all, shares look to be substantially discounted from the current $226 share price (as of January 17th, 2025).

Stock #2: British American Tobacco (BTI)

Next up on my watch list for February is British American Tobacco. My investment thesis is essentially unchanged from my December 2024 Stock Purchases blog post.

BTI's 8.1% yield is effortlessly covered by profits and free cash flow. The company looks poised to generate mid- single-digit annual EPS growth in the years ahead. Finally, the forward P/E remains below eight. Thus, why I'm interested in buying more BTI at the current $36 share price (as of January 17th, 2025).

Stock #3: PepsiCo (PEP)

The third stock on my watch list for next month is PepsiCo. Curious readers can check out my investment thesis in my November 2024 Dividend Stock Watch List blog post and December Seeking Alpha article.

The higher for longer rate environment and concerns about GLP-1 weight loss drugs have pressured PEP's stock in recent months. Yet, the company's annual core EPS growth looks to be holding around 6% or 7% for now. PEP also boasts an A-rated balance sheet. Along with a well-covered 3.7% dividend yield, I believe the stock should deliver double-digit annual total returns from the current $148 share price (as of January 17th, 2025).

Concluding Thoughts:

That's it for now. My plan is to allocate about 45% of my capital to AMZN and split the remaining 55% between BTI and PEP. In my view, this is an excellent mix of growth at a cheap valuation in AMZN and sustainable and growing income on sale in BTI and PEP.

Discussion:

Are any of AMZN, BTI, or PEP on your watch list for February 2025?

If not, what are you keeping on your radar for next month?

I appreciate your readership and look forward to your comments below!