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What’s next for the London stock market? In a consistent year of gains, the FTSE 100 is up 5.7 per cent to 8,173 in 2024, while the FTSE 250 is up 4.7 per cent.
Analysts at Goldman Sachs believe the FTSE 100 will end 2025 at 8,500 points, while Russ Mould, chief investment officer at AJ Bell, estimates the blue-chip index will hit 9,000 in 2025, an increase of 10 per cent.
“UK stocks don’t look appreciated, and not appreciating can mean they are cheap,” he says.
However, it won’t be easy and another year of volatility looms as Donald Trump returns to the White House, Germany and France face more political turmoil and investors grapple with geopolitical developments in the Middle East, Ukraine and beyond.
“Volatility is expected to reign in 2025,” says Emma Wall of 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 pay attention to? We’ve asked city experts for their advice for 2025.
Each recommends one stock for brave investors who are willing to take risks and another for the more cautious.
Following advice always carries 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 don’t look appreciated, and not appreciating can mean they’re cheap,” says Russ Mold
Experts: Abby Glennie and Amanda Yeaman, fund managers at abrdn
For the cautious: ME GROUP INTERNATIONAL
Current price: 205p
Change in 2024: up to 64%
ME Group is not one to get excited when we tell you what it does: the community laundry and photo booths are its main income. But that provides resilient revenue streams, predictability, plenty of growth opportunities in deployment, and an attractive return on capital.
Photo.ME, which is especially strong in continental Europe and operates in 19 countries where passport photos cannot be taken with smartphones, is the cash cow of the business and offers strong margins.
This is helping to fund the launch at Wash.ME, a 24/7 self-service laundry, an even higher margin division with plenty of room to grow. The firm continues to invest in growth, evolving its offering through the adoption of new technologies across all divisions.
For the brave: RASPBERRY PI
Current price: 625p
Change in 2024: 123% increase
Raspberry Pi has the potential to be one of the most unique tech stocks the UK markets have ever seen. You will use their single-board computers every day without realizing it. It listed on the stock exchange in 2024 and is off to a strong start, but industrial markets, which account for 70 percent of its revenue, have had a lackluster performance this year. In 2025 we expect some recovery, which will help drive growth.
The company’s education and its enthusiastic customers, who account for 30 percent of revenue, create strong and stable demand. New product development is also key to this business and its execution has been strong in this regard. 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: 7% decrease
GSK is becoming a trusted name in raising and meeting share price predictions. And the pharmaceutical company shows signs of continuing stable performance. The risk of litigation over its heartburn drug Zantac has decreased and HIV treatments remain a cornerstone of its performance, contributing 20 percent of revenue.
Hargreaves Lansdown’s Susannah Streeter suggests Nvidia stock for brave investors
GSK’s strength lies in its research and development pipeline, which has delivered 11 positive late-stage clinical updates so far this year, with five major product approvals expected next year. Its new 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: 185% increase
Given the stratospheric growth Nvidia has experienced this year and the recent swing in share price, questions have been raised about its prospects. But this chip giant, which has revolutionized the management of artificial intelligence workloads, has a technological advantage that makes it difficult to beat.
He sees a $1 trillion opportunity to upgrade aging data centers and expand AI infrastructure. This cements Nvidia as a once-in-a-generation company and is projected to deliver triple-digit sales growth in 2025. Despite emerging competition, Nvidia’s technological supremacy and financial strength mean its rivals will struggle to take it the crown.
Expert: Russ Mold, Chief Investment Officer at AJ Bell
Russ Mold says Diageo is a good choice for the more cautious investor this year
For the cautious: DIAGEO
Current price: 2537.5p
Change in 2024: 11% decrease
Lockdowns and the pandemic misled management and shareholders into thinking that spirits had entered a new era of growing demand and “premium” prices. Since then, reality has set in, thanks to the cost of living crisis, and Diageo’s share price has fallen back to 2020 levels.
But a 25-year streak of annual dividend growth is testament to the power of the drinks giant’s portfolio of brands, which would be almost impossible to replicate even at the company’s current £58bn stock market valuation. If CEO Debra Crew can’t come up with a better interpretation of the business, then an activist investor can do it for her.
For the brave: C&C
Current price: 146p
Change in 2024: 4% decrease
The power of C&C’s drinks brands, such as Bulmers, Magners and Tennent’s, has been tested by bad British weather, the cost of living crisis and self-inflicted wounds, notably a software rollout and productivity programme. failures in Matthew Clark’s beverage distribution business. As a result, the stock is no higher than it was in 2009.
But the appointment of Roger White, formerly of AG Barr, is a big step for a company with possibilities for self-help, through investments in its premium cider and beer brands, cost efficiencies in distribution and perhaps more drastic actions to simplify the group structure. .
There is also room for net debt to decline, and lower risk can mean a higher share price.
Expert: Ben Yearsley, founder of Fairview Investing
For the cautious: BT
Current price: 144p
Change in 2024: 17% increase
BT has been a disappointment for years – down 64% in the last decade. But now it seems that the company is putting many of its problems behind it.
The pension deficit has been reduced and the deployment of fiber broadband in homes is advancing at what could almost be called the speed of light. There is also a decent dividend yield of 5.4%.
For the brave: PRUDENTIAL
Current price: 637p
Change in 2024: 28% decrease
This life insurer’s shares are cheap because of its ties to China, explains Ben Yearsley
The shares of this life insurer are cheap due to its links with China: Asia is today its main focus. But this is a quality business with a ridiculously cheap valuation. The icing on the cake is a dividend yield of 2.6%. At some point the markets will wake up and finally start to take notice.
Amish Patel, Head of Equity Research at Charles Stanley
For the cautious: THERMO FISHER SCIENTIFIC
Current price: $518.80
Change in 2024: 2% decrease
This US-listed company is a leading player in the life science tools market. It produces scientific instruments, laboratory equipment, consumables and reagents for research in biological sciences, pharmaceuticals, biotechnology and diagnostics. It is also a leader in contract research and drug manufacturing.
With a high level of recurring revenue (more than 80% of revenue is from services and consumables), this is a quality growth stock with defensive characteristics. Next year will benefit from long-term structural trends in healthcare and the near-term recovery of the life sciences tools market after a difficult two years.
For the brave: SYNOPSIS
Current price: $487
Change in 2024: 5% decrease
Synopsys develops software to develop superior microchips that power everything from phones to artificial intelligence systems. Listed in the United States, it operates in a context of political tension, as Washington and Beijing clash in a race for information superiority.
In 2025 it should complete the $35 billion purchase of engineering simulation group Ansys, the largest acquisition in its history. Greater computing power requires more complex chips, and companies like Amazon and Google are developing their own custom chips to reduce dependence on third parties like Nvidia.
Synopsys has even built artificial intelligence into its own software tools, allowing it to accomplish in weeks what can take large engineering teams months. This increases your productivity, as well as helping to solve the challenges posed by industry-wide talent shortages.
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