3 'Underdog Stocks' For The Rest Of 2025

With the S&P 500's YTD return at only 1.69%, investors are looking for undervalued stocks, and analysts have identified Centene (CNC), Wendy's (WEN), and Eli Lilly (LLY) as potential underdogs for the second half of 2025. Centene is favored for its leading position in Medicaid and Marketplace programs, Wendy's for its brand recognition and digital growth potential, and Eli Lilly for advancements in obesity and diabetes drugs and its pipeline of therapies targeting age-related conditions; however, analysts caution investors to carefully vet business fundamentals and growth projections.

Analysis

Amid a stagnant market, with the S&P 500 returning only 1.69% year-to-date, analysts are highlighting several 'underdog' stocks with distinct catalysts for the second half of 2025. Centene (CNC), despite its 8.96% YTD decline, is presented as a value opportunity based on its market leadership in Medicaid and a strong historical growth track record, including a 26% revenue CAGR over the past decade. The current pressure on earnings from post-COVID Medicaid redetermination is viewed as temporary, with expectations for margin normalization as states adjust reimbursement rates, a view seemingly shared by management given their aggressive stock buybacks. In contrast, Wendy's (WEN) represents a deep value and turnaround play, having fallen 30.49% YTD. Its investment case is built on a low 12x P/E ratio, a compelling 5% dividend yield, and strategic pivots toward digital sales and value offerings that align with current consumer behavior. Finally, Eli Lilly (LLY), trading flat with the market, is positioned as a quality growth story, supported by a high Benzinga Quality Rating of 89.63. Its potential is anchored by major advancements in obesity and diabetes drugs like Mounjaro and a deep pipeline targeting large demographic trends, including Alzheimer's with Donanemab.

Key Decisions for Investors

• For Centene (CNC), investors should monitor state-level Medicaid reimbursement rate adjustments, as a return to historical levels could signal a margin recovery and validate the bull case despite its recent underperformance.
• Given Wendy's (WEN) significant stock decline, value-oriented investors might consider its 12x P/E ratio and ~5% dividend yield, while monitoring quarterly results for evidence of successful digital platform growth and market share gains from its value offerings.
• Investors interested in Eli Lilly (LLY) should focus on clinical trial data and regulatory announcements for its pipeline drugs, particularly Donanemab for Alzheimer's, as these are key catalysts for unlocking growth beyond its established franchises.
• When evaluating these or any 'underdog' stock, it is crucial to scrutinize business fundamentals and growth projections to differentiate truly undervalued companies from potential value traps with deteriorating businesses.