It's been an interesting start to 2025 to say the least -- far more interesting than the 2% decline in the S&P 500 might suggest. The market has been volatile, and there have been many clear winners and losers of the first quarter.
To be clear, I certainly have some stocks in my portfolio that haven't performed too well this year. But there are some in my portfolio that are higher by 20% or much more through just the first three months of the year. With that in mind, here's a rundown of my three best-performing stocks of the first quarter of 2025, why each one has done so well, and which one I'm buying more shares of despite the higher price tag.
NASDAQ: RDFN
Key Data Points
This stock is up nearly 40% in 2025
My best-performing stock of 2025 so far is Redfin (RDFN 0.05%), the real estate technology platform and brokerage. But I need to put a big asterisk on this one.
In a nutshell, Redfin has performed so well because the business is being acquired by leading mortgage company Rocket Companies (RKT -0.22%). It is an all-stock acquisition, so Redfin's share price can, and probably will, move quite a bit between now and when the deal closes.
Rocket aims to take Redfin and use it to help fulfil its vision of an all-in-one real estate platform, offering everything needed to complete the homebuying or selling processes. Rocket is combining its massive mortgage business, which originated more than $100 billion loan volume in 2024, which was a very slow year for real estate, with Redfin's platform that has about 50 million monthly visitors. There are some big opportunities for synergies here, and it will be interesting to see how the integrated business performs.
A fresh all-time high for this amazing business
MercadoLibre (MELI 0.65%) is a top five position in my stock portfolio, and I can't say enough good things about its business, its leadership, and its future potential.
The stock is up by 27% so far in 2025 as of this writing, and the move can mostly be attributed to MercadoLibre's stellar fourth-quarter earnings report. Not only did MercadoLibre beat expectations on the top and bottom lines, but most of the growth numbers from within the business also looked great. The e-commerce marketplace sold 27% more items, Mercado Pago saw 33% higher payment volume, and the young but promising credit portfolio grew 74% year over year.
Just as importantly, the profitability fears investors had after the company's third-quarter earnings report have been calmed. After plunging margins in the third quarter, the fourth quarter showed a nice rebound in operating and net margins, and credit losses looked more in line with what investors were hoping for. With a massive growth opportunity still remaining in its core businesses and several key revenue streams still in their infancy, MercadoLibre could have much more room to the upside.
An incredible turnaround and lots of potential
Sea Limited (SE -10.83%) soared by 160% in 2024, but it is performing well again in 2025, with a 23% gain through March 24.
The short explanation is that all three areas of its business are performing much better than expected and are growing rapidly. The e-commerce business grew its revenue by 41% year over year in the fourth quarter, the Sea Money digital financial services business' outstanding loan principal increased by 64%, and even the Garena digital entertainment platform, which had been struggling in the post-COVID era, posted 19% year-over-year growth in bookings.
Overall, Sea's revenue soared by 39%, but the big story is profitability. Sea generated $238 million of net income in the fourth quarter, compared to a $112 million loss a year ago. The company now has $10.4 billion in cash and equivalents, giving it tremendous financial flexibility to invest in new growth opportunities as they arise.
Which am I buying more shares of right now?
All three of these stocks are up for good reasons. When it comes to Redfin, however, I'm in wait-and-see mode for the time being, but I don't plan on selling just yet. However, I'll have to decide before the merger closes if I want to be a Rocket shareholder.
Sea Limited is an impressive turnaround story and was my overall best performing stock in 2024. I haven't added any more to my position, but it's definitely on my watch list, as there's plenty of potential ahead.
That leaves MercadoLibre. Even the stock has hit a fresh all-time high, I've added to my position already this year, and I plan to continue doing so, especially if there's any short-term weakness in the stock due to market turbulence. Management is executing on their growth strategy very well, and the business has fantastic momentum. MercadoLibre is already my largest investment of these three by a significant margin, but I still think it's attractive enough to add even more to my position right now.
