Two must-own US stocks to bet on continued M&A boom in 2025

The article forecasts a robust resurgence in M&A activity for 2025, driven by improving CEO confidence, stabilizing interest rates, and substantial private equity dry powder. This environment positions Moelis & Co (MC) and KKR & Co Inc (KKR) as prime investment opportunities. Moelis, a pure-play M&A advisory firm, is expected to benefit from increased deal volumes, with analysts seeing over 20% upside potential and a 3.6% dividend yield. KKR, a large alternative asset manager, is poised to capitalize on deal execution, including divestitures and leveraged buyouts, with an average analyst price target suggesting approximately 23% upside.

Analysis

The financial markets are anticipating a significant resurgence in mergers and acquisitions (M&A) activity for 2025, underpinned by stabilizing interest rates, rising CEO confidence, and a substantial volume of undeployed private equity capital. This environment creates a bullish case for companies integral to the dealmaking ecosystem. Moelis & Co. (MC) is presented as a pure-play investment on this theme, offering direct exposure to advisory fees without the balance sheet risks of trading or lending operations. The firm's debt-free structure and recent hiring of senior bankers signal strong internal confidence in a robust deal pipeline. Despite a consensus "hold" rating, high-end analyst price targets of up to $90 suggest a potential upside of over 20%, complemented by a 3.6% dividend yield. In parallel, KKR & Co Inc. (KKR) is positioned as a primary beneficiary on the execution side of M&A. As an alternative asset manager with over $500 billion in AUM, KKR directly profits from structuring and executing transactions like leveraged buyouts and corporate divestitures. Its diversified model, which includes insurance and real estate, provides more stable fee-related earnings. This is reflected in a consensus "overweight" rating from Wall Street, with a mean price target of approximately $166 indicating a potential 23% upside.

Key Decisions for Investors

• Investors bullish on a 2025 M&A upcycle should consider bifurcated exposure, allocating to both pure-play advisory firms and large-scale asset managers to capture different facets of the dealmaking value chain.
• For direct, high-beta exposure to deal volume, Moelis & Co. (MC) is a candidate, offering a 3.6% dividend yield and over 20% potential upside to উচ্চ price targets, though its 'hold' consensus warrants monitoring deal flow for confirmation.
• For scaled, diversified exposure to deal execution and asset monetization, KKR & Co. (KKR) is an option, supported by a strong 'overweight' consensus and a price target implying roughly 23% upside from current levels.
• Monitor leading indicators of M&A activity, such as announced deal volumes and private equity deployment rates, as these will be key catalysts for realizing the upside potential in both MC and KKR.