NewJersey Resources Corporation (NJR) Stock Outlook.

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Eight Fundamental Forecasts for 2025 Argus Research follows a top-down investment framework, starting with the domestic economy and moving to the global economy, interest rates, stock markets, sectors, sectors and finally stocks, here are our eight fundamental forecasts for 2025. Forecast 1: The US Economy We expect the US economy to continue To expand in 2024, and to remain on a growth path supported by three factors: an engaged consumer, strong corporate investment, and bucking the trend. Government spending. Over the past two years, as short-term interest rates rose to unprecedented levels, we argued that the economy was only a wrong turn or two away from recession. US GDP looks healthier now. According to our estimates, the US economy will have grown at a rate of 2.6% in 2024, down slightly from the 2.9% rate in 2023, but still above the estimated long-term growth rate of 2.0%. The key in 2025, as usual, will be consumer spending, which represents nearly two-thirds of overall GDP. At this stage, the consumer benefits from low unemployment rates (4.2%), rising stock prices to unprecedented levels, and rising housing prices. A contraction between any of these three could lead to a slowdown. We will be watching unemployment claims closely this year. The latest trend is 200,000 benigns per week. If this data point rises above 300K, the unemployment rate could rise towards 5.0%. That’s when recession fears return to Wall Street. Currently, our estimate for GDP growth in 2025 is 1.8%, compared to 2.0% in 2023. Our preliminary forecast for 2026 is also close to the long-term average rate. Prediction 2: Inflation Inflation trends were more important than GDP trends for the stock market in 2022-2023, but their impact diminished slightly, as expected, in 2024. This is because the Fed remained ahead of the inflation curve, having raised interest rates. Interest. The federal funds rate rose from 0.0% in early 2022 to 5.25%-5.50% by the end of 2023, while the core PCE inflation index rose and fell from 5.5% in March 2022 to a recent reading of 2.8%. In fact, the Fed is now starting to cut interest rates in order to narrow the FEF/PCE gap from the current relatively wide level of 180 basis points. We expect core inflation to slowly trend toward 2.0% in 2025. While future producer prices are actually falling, fixed prices such as shelter and transportation remain high. Wage growth has recently fallen to about 4% year over year. We believe that the Fed, after cutting 100 basis points from the federal funds rate in 2024, will lower its target overnight lending rate by another 75 basis points in the first half of 2025. Forecast 3: USD/Gold/Oil We look for the dollar to remain at high levels in 2025. The US Dollar Index (DXY) is up about 4% in 2024, and is higher this fall as Treasury prices rise And the policy of President-elect Trump supporting him. Growth platform. The US currency’s current valuation level is about 20% higher than the average over the past 20 years, as the US economy has been in better shape than the economies of trading partners such as Japan, Europe, and even China. This relative strength of the US economy and demand for US investments, including stocks of innovative companies, may keep the dollar steady in 2025. Gold is approaching all-time highs in the wake of the dollar’s rise. The current price of gold partly reflects the perceived safety of hard assets amid global conflicts, such as in Ukraine and the Middle East. Expectations of additional interest rate cuts by the Fed are also helping gold, as lower interest rates reduce the risk of a global economic recession and thus a potential decline in gold purchased for jewelry. Looking ahead, our expected trading range for gold in 2025 is $2,800-$2,300, and our average forecast for this year is $2,600, up from an average of $2,450 in 2024. Oil prices may head in the other direction. The most important factor in the price of oil is the supply and demand equation, which appears to favor supply over the next two years. Our forecast for the average WTI price in 2025 is $75 per barrel, down from the 2024 average of $78 and recent highs of around $120 in 2022. Prediction Four: The Yield Curve The yield curve has returned, as we expected, To its normal upward slope in 2024 after reversing for several quarters in 2022-2023. At the short end of the curve, the Fed has revamped its interest rate toolkit and made progress in reducing its balance sheet. Because inflation trends have calmed, the central bank has already begun to cut short-term interest rates, and we expect further cuts in the first half of 2025. At the end of the long curve, renewed strong government spending during the 2024 presidential election campaign. Focus on the level of US debt to gross domestic product. The current rate is bloated 120%. This is not an immediate problem, as the US dollar remains at high levels, signaling to global investors that America remains the leading economy. But leveraged spending may establish a floor for long-term interest rates in 2025. Our current range for benchmark 10-year Treasuries is 3.75% to 4.75%. Thus, we expect the yield curve to steepen somewhat in 2025. Forecast 5: Earnings and Valuations Corporate earnings grew at a strong single-digit pace in 2024, having recovered from the earnings slump in 2022-2023. For 2025, we recently raised our forecast for S&P 500 earnings from continuing operations to $276, from $265. Our revised forecast forecasts full-year EPS growth of approximately 12%. Our increased optimism towards 2025 reflects the expected better performance of three sectors that were negative in the third quarter of 2024: energy, materials and industrials. We expect the energy sector’s annual earnings decline to moderate in the fourth quarter of 2024 and the first quarter of 2025 before swinging to a modest positive level in the second or third quarter. Materials and Industrials could swing to positive comparisons more quickly, perhaps as soon as Q4 2024 (Materials) and Q1 2025 (Industrials). The strongest EPS growth in Q3 2024 came from telecommunications services. Another sector that is expected to grow sharply in the next year is information technology. Utility growth is expected to moderate, but remain above average over the long term. Other sectors that are expected to grow EPS above their long-term averages in 2025 include financials, healthcare, consumer discretionary, and consumer staples. Meanwhile, equity valuations, according to our stock/bond measure, improved through 2024 (despite stocks rising). At times in 2023, our measure indicated that stock prices were more than one standard deviation above normal, due to slower earnings growth as well as rising inflation and interest rates. However, interest rates have now fallen and earnings have improved, so the measure suggests the stock is below fair value. In more traditional valuation metrics, the current forward P/E ratio for the S&P 500 is about 21, within the normal range of 15 to 24. The two-year forward P/E based on our estimates and the current price level of the S&P 500 is within 4%-7% of the five-year P/E for the S&P 500. The EPS is 4.1% minus 10 real The one-year Treasury yield (Remember that the real return is the nominal return minus inflation) Richer than average, but not at a level that indicates overvaluation. The ratio of the S&P 500’s price to an ounce of gold is now 2.3, within the historical range of 1 to 3. We look for equity valuation multiples to widen modestly in 2025, as interest rates continue to decline, helping stock market returns. Sixth Forecast: Sectors and Sectors In terms of market sectors, we look to set the pace for growth in 2024 with lower interest rates and a recovery in EPS growth. We expect US stocks to continue to outperform global stocks, based on the risk profile and growth outlook, tempered by valuation. Small-cap stocks also offer relatively low valuations compared to large-cap stocks, but we recommend overweighting large-cap stocks given the sector’s superior growth prospects (particularly outside the IT sector) and financial strength. Our sector ratings model takes into account sector earnings momentum, price action, valuations, and analyst sentiment, among other factors. Based on the model we run quarterly, our current overweight segments are telecom services