The inventory market has been beneath stress in 2025. Catalysts together with China’s DeepSeek R-1 mannequin, commerce battle issues, and different sources of macroeconomic uncertainty have all brought on huge sell-offs, and the S&P 500 index is down roughly 9% even after regaining some floor not too long ago. In the meantime, the extra growth-oriented Nasdaq Composite index is down roughly 13.5% throughout that stretch.

Whereas buyers must be conscious of the added uncertainty and dangers that may include investing amid a risky market backdrop, this 12 months’s sell-offs may create alternatives to construct positions in shares that may generate nice returns over the lengthy haul. With that in thoughts, learn on to see why two Motley Idiot contributors suppose these shares are good buys after huge valuation pullbacks in 2025.

Keith Noonan (Reddit): Reddit (RDDT 5.50%) inventory plummeted in February after the corporate revealed fourth-quarter outcomes that arrived with weaker-than-expected consumer engagement metrics. The corporate’s share worth then continued to maneuver decrease along side trade-war developments and geopolitical dangers. On the heels of those pressures, the inventory is now down 52% from its excessive this 12 months.

Regardless of the sell-off, Reddit managed to develop income 71% 12 months over 12 months to succeed in $427.7 million within the fourth quarter. In the meantime, day by day common distinctive customers (DAUq) nonetheless elevated 39% 12 months over 12 months to 101.7 million. That determine got here in under the 103.1 million DAUq rely referred to as for by the typical Wall Avenue estimate, however it nonetheless represented robust progress. Following its current valuation pullback, Reddit inventory appears like an underappreciated synthetic intelligence (AI) play.

Crucially, Reddit has emerged as a well-liked search platform and outcomes vacation spot, as a result of the platform homes a large repository of consumer generated solutions to questions, and good solutions to questions are sometimes given precedence because of a voting system.

Reddit can also be licensing its knowledge for utility programming interfaces (APIs) and the coaching of AI fashions, permitting prospects to entry real-time knowledge streams of knowledge from the platform to be used in behavioral evaluation and constructing purposes and algorithms. Citing a report from Worldwide Information Company, Reddit sees the marketplace for AI (excluding China and Russia) rising at a 20% compound annual progress charge from 2024 via 2027 and reaching $1 trillion on the finish of the forecast interval.

The corporate is utilizing AI to make the content material it delivers to customers safer and extra related, and it plans to make extra strikes to advertise localized content material to customers on its platform. In doing so, administration thinks that it might probably assist bolster its progress internationally and develop its attain across the globe. With the inventory nonetheless down huge, Reddit appears like a worthwhile funding forward of the publication of its first-quarter outcomes on Might 1.

Close to-term headwinds for Hexcel stay, however so does long-term progress

Lee Samaha (Hexcel): Hexcel (HXL 2.50%) inventory is down 30% from its excessive in 2025, and it isn’t exhausting to see why. The light-weight carbon fiber composite firm’s gross sales are a operate of its prospects’ manufacturing, and its two largest prospects are Boeing and Airbus, in addition to their suppliers. That is fantastic when their manufacturing charges are booming, however not so good when provide chain points are inflicting airplane manufacturing slowdowns.

Certainly, as Hexcel’s CEO Tom Gentile mentioned on the current first-quarter earnings name, “2025 is turning out to be another year in which production rate increases for commercial aircraft will not meet initial expectations due to ongoing supply chain disruption.”

As such, on the earnings name, Hexcel lowered its full-year gross sales, earnings, and free money move (FCF) steering. The wrongdoer is the Airbus A350 program, the place Hexcel began the 12 months anticipating to ship 84 shipsets of composites (every shipset on the A350 is value $4.5 million to $5 million) to Airbus in 2025, however now expects to ship simply 68. It isn’t excellent news, and the market wasted no time pricing it in.

However this is the factor: Boeing and Airbus nonetheless have multiyear backlogs. Furthermore, as Gentile famous, Hexcel can already assist increased manufacturing charges. This implies its money move will develop considerably when gross sales begin bettering, with an eventual improve in airplane manufacturing, as a result of it would not must ramp up capability considerably.

The corporate additionally tends to supply domestically for its manufacturing within the U.S. and Europe, so tariffs, as they stand, aren’t a major challenge (administration estimates successful of $3 million to $4 million 1 / 4, which it might probably offset with productiveness enhancements). Lastly, the revised steering for 2025 of adjusted diluted earnings of $1.85 to $2.05 and FCF of $190 million leaves the inventory buying and selling at about 25 occasions earnings and 20 occasions FCF in 2025. That is a great worth for a inventory with glorious long-term progress prospects.