Where next for the London stock market? A steady year of gains saw the FTSE 100 climb 5.7pc to 8,173 in 2024, while the FTSE 250 was up 4.7pc.
Goldman Sachs analysts believe that the FTSE 100 will end 2025 at 8,500 points, while Russ Mould, investment director at AJ Bell, reckons the blue-chip index will hit 9,000 in 2025 – a rise of 10pc.
‘UK stocks feel unloved, and unloved can mean cheap,’ he notes.
It won’t be straight forward, however, and another year of volatility is very much on the cards as Donald Trump returns to the White House, Germany and France face further political upheaval and investors grapple with geopolitical events in the Middle East, Ukraine and beyond.
‘Expect volatility to reign in 2025,’ says Emma Wall at Hargreaves Lansdown. ‘But, while it can be difficult to manage the emotional rollercoaster of a volatile investment market, it also creates opportunities.’
So which stocks should investors take a look at? We asked City experts for their tips for 2025.
Each one recommends a share for brave investors who are willing to take a risk, and one for the more cautious.
Following tips always involves the risk of losing some or all of your money, so it’s a good idea to do your own research before investing.
‘UK stocks feel unloved, and unloved can mean cheap,’ says Russ Mould
Experts: Abby Glennie & Amanda Yeaman, fund managers at abrdn
For the cautious: ME GROUP INTERNATIONAL
Current price: 205p
Change in 2024: up 64pc
ME Group isn’t one you’ll get excited about when we tell you what it does – communal laundry and photo booths being its main revenue. But that is providing resilient revenue streams, predictability, many growth opportunities in its rollout and attractive return on capital.
Photo.ME, which is especially strong in mainland Europe and operates in 19 countries where passport photos can’t be taken with smartphones, is the cash cow of the business and delivers strong margins.
That is helping fund the rollout across Wash.ME, a 24/7 self-service laundry, an even higher margin division with lots of room for growth. The firm continues to invest in growth, evolving its offering through new technology adoption in all divisions.
For the brave: RASPBERRY PI
Current price: 625p
Change in 2024: up 123pc
Raspberry Pi has the potential to be one of the most unique tech stocks UK markets have seen. You’ll use its single board computers every day without realising. Listed on the stock market in 2024, it’s had a good start, but the industrial markets which make up 70pc of its revenue have been lacklustre this year. In 2025 we expect some recovery in that, which will help drive growth.
The firm’s education and enthusiast customers, who make up 30pc of revenue, create strong and stable demand. New product development is also key for this business, and its execution has been strong on this. It is globally diversified in sales, and is also evolving its sales strategy.
Expert: Susannah Streeter, head of money and markets at Hargreaves Lansdown
For the cautious: GSK
Current price: 1346.5p
Change in 2024: down 7pc
GSK is becoming a dependable name for raising and meeting share price predictions. And the pharmaceutical firm shows signs of continuing to be a steady performer. Litigation risk over its Zantac heartburn drug has eased, and HIV treatments remain a cornerstone of its performance, contributing 20pc of revenues.
Hargreaves Lansdown’s Susannah Streeter suggest Nvidia shares for investors feeling brave
GSK’s strength lies in its research and development pipeline, which delivered 11 positive late-stage clinical updates year to date, with five major product approvals expected next year. Its newer treatments are a key part of GSK’s future. The smaller oncology division is growing rapidly, with promising growth drivers in both existing treatments and the development pipeline.
For the brave: NVIDIA
Current price: $137.50
Change in 2024: up 185pc
Given the stratospheric growth Nvidia has seen this year and the recent wobble in the share price, questions have been raised about its prospects. But this chip giant, which has revolutionised management of artificial intelligence workloads, has a technological edge which makes it hard to beat.
It sees a $1trillion opportunity in upgrading outdated data centres and expanding AI infrastructure. This cements Nvidia as a once-in-a-generation company and it is forecast to deliver treble digit sales growth in 2025. Despite emerging competition, Nvidia’s technological supremacy and financial strength mean rivals will struggle to knock off its crown.
Expert: Russ Mould, investment director at AJ Bell
Russ Mould says Diageo is a good option for the more cautious investor this year
For the cautious: DIAGEO
Current price: 2537.5p
Change in 2024: down 11pc
Lockdowns and the pandemic fooled management and shareholders into thinking spirits had entered a new era of rising demand and ‘premiumised’ prices. Reality has since set in, thanks to the cost of living crisis, and Diageo’s share price has tumbled back to 2020 levels.
But a 25-year streak of growth in the annual dividend is testament to the power of the drinks giant’s portfolio of brands, which would be nigh-on impossible to replicate even at the company’s current £58bn stock market valuation. If chief executive Debra Crew cannot get a better tune out of the business, then an activist investor may do it for her.
For the brave: C&C
Current price: 146p
Change in 2024: down 4pc
The power of C&C’s drinks brands, such as Bulmers, Magners and Tennent’s, has been tested by rotten British weather, the cost of living crisis and self-inflicted wounds, notably a bungled software implementation and productivity programme at the Matthew Clark drinks distribution business. As a result, the shares are no higher than they were in 2009.
But the appointment of Roger White, formerly of AG Barr, is a huge step for a firm with scope for self-help, via investment in its premium cider and beer brands, cost efficiency in distribution and perhaps more dramatic action to simplify the group structure.
There is scope for net borrowing to come down, too, and less risk can mean a higher share price.
Expert: Ben Yearsley, founder of Fairview Investing
For the cautious: BT
Current price: 144p
Change in 2024: up 17pc
BT has been a disappointment for years – down 64pc over the past decade. But it now feels as though the company is putting many of its issues behind it.
The pension deficit has been reduced and the roll-out of fibre broadband to homes is now going at what you could almost call the speed of light. There is also a decent dividend yield of 5.4pc.
For the brave: PRUDENTIAL
Current price: 637p
Change in 2024: down 28pc
This life insurer’s shares are cheap because of its links with China, Ben Yearsley explains
This life insurer’s shares are cheap because of its links with China: Asia is its main focus nowadays. But this is a quality business on a ridiculously cheap valuation. The icing on the cake is a 2.6pc dividend yield. At some point the markets will wake up and finally start taking notice.
Amish Patel, head of equity research at Charles Stanley
For the cautious: THERMO FISHER SCIENTIFIC
Current price: $518.80
Change in 2024: down 2pc
This US-listed firm is a leading player in the life science tools market. It produces scientific instruments, lab equipment, consumables as well as reagents for life sciences, pharmaceutical, biotech and diagnostics research. It is also a leader in contract research and drug making.
With a high level of recurring revenue – more than 80pc of revenue is in services and consumables – this is a quality growth stock with defensive characteristics. Next year it stands to benefit from long-term structural trends in healthcare and the short-term recovery in the life science tools market after a tricky two years.
For the brave: SYNOPSYS
Current price: $487
Change in 2024: down 5pc
Synopsys develops software to develop superior microchips that power everything from phones to artificial intelligence systems. US-listed, it operates against a backdrop of political tension, as Washington and Beijing clash in a race for computing superiority.
In 2025 it should complete the $35bn purchase of engineering simulation group Ansys, its largest-ever acquisition. Greater computing power requires more complex chips, and companies such as Amazon and Google are developing their own custom chips to cut reliance on third parties such as Nvidia.
Synopsys has even embedded artificial intelligence into its own software tools, letting it accomplish in weeks what may take months for big engineering teams. This boosts its productivity, as well helping solve challenges brought by an industry-wide talent shortage.
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