Looking for Sneaky Growth? These 2 Stocks Are Low-Key Buys for 2025.

These are extremely attractive valuations for this kind of FCF growth. Moreover, if the economy improves, those estimates have a potential upside, as capital spending and research and development budgets are likely to be freed up by manufacturing companies.

While its origins lie in precise positioning hardware, Trimble’s future lies in helping its customers use the masses of data produced by its hardware to improve its daily workflow. Trimble’s key end markets include construction/infrastructure, transportation/logistics, and geospatial, and it uses its “connect and scale” strategy to generate significant efficiency gains for them.

“Connect” refers to the collation of masses of disparate digital data that multiple parties can share and use, and “scale” refers to the data-driven insights that improve workflow. For example, in construction and infrastructure, the creation, analysis, and precise monitoring of digital data help designers, architects, and engineers improve planning and scheduling, reduce waste, and generate significant cost savings while ensuring the timely completion of projects in the physical world.

Adoption across its key end markets continues at an impressive rate, and Trimble continues to grow its annualized recurring revenue (ARR) at a mid-teens rate.

Here again, you can see the deceiving nature of Trimble’s top line compared to its ARR growth. The reality is that Trimble’s revenue has declined recently due to divestitures of noncore businesses and the creation of a joint venture in agriculture with AGCO.

Trimble’s FCF needs some explanation, as Wall Street analysts forecast an 11.4% decline in 2025 to $446 million before rising 79% to almost $800 million in 2026. The decline in 2025 comes down to an anticipated $250 million cash payment and $30 million worth of transaction costs relating to the AGCO deal. Adjusting for these one-off items means an underlying FCF of $726 million, implying a price-to-FCF multiple of 24 times the adjusted FCF for 2025 and then 22 times for 2026.

Both companies are improving their key metrics over their revenue, and the hidden nature of this improvement makes them great stocks to buy for investors willing to go beneath the hood and kick the tires. As such, PTC and Trimble are excellent options for a growth-orientated portfolio.

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*Stock Advisor returns as of March 3, 2025

Lee Samaha has no position in any of the stocks mentioned. The Motley Fool recommends PTC and Trimble. The Motley Fool has a disclosure policy.

Looking for Sneaky Growth? These 2 Stocks Are Low-Key Buys for 2025. was originally published by The Motley Fool