Warning! 2 FTSE 100 shares I think could collapse in 2025

The FTSE could be in for another strong year in 2025 as interest rates fall. But the outlook may be bleaker for these UK blue chips, says Royston Wild.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

I think these FTSE 100 shares might fall through the floor next year. Here’s why.

Lloyds Banking Group

Created with Highcharts 11.4.3Lloyds Banking Group Plc PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

The Lloyds (LSE:LLOY) share price has risen an impressive 34% during the past year. While investors are toasting these strong gains, I fear that the bank‘s stratospheric rise is unwarranted, and that it’s in danger of a correction before too long.

For one, it faces a prolonged period of weak earnings growth, plagued by low levels of lending and further loan impairments. This reflects the poor outlook for the UK economy and the bank’s lack of overseas exposure.

Should you invest £1,000 in Games Workshop right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Games Workshop made the list?

See the 6 stocks

I also fear that expected interest rate cuts will damage Lloyds’ bottom line. While Bank of England actions would boost the economy, they would also sap the banks’ net interest margins (NIM), a critical gauge of profitability.

The biggest threat to the Lloyds share price, however, could be from the Financial Conduct Authority’s (FCA) probe into the mis-selling of car loans. The Black Horse Bank is a major motor finance supplier, and has set aside £450m to cover possible penalties associated with ‘secret’ commissions between lenders and car retailers.

This may be nowhere near enough, however. RBC Capital believes Lloyds may have to pay £3.2bn, up from the £2.5bn the broker had previously forecast.

As a result, RBC also thinks the bank may have to halve share buybacks planned for next year, to £1bn. If this begins to look likely, and indeed if broader news flow around the investigation worsens, then Lloyds’ share price could plummet.

The FTSE firm has one of the strongest banking brands out there. This in turn could help it to grow profits even as the domestic economy struggles.

But on balance, I think the firm carries far too much risk right now.

BP

Created with Highcharts 11.4.3Bp P.l.c. PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

Oil majors like BP (LSE:BP.) also face tough conditions in 2025 that could damage their share prices. More specifically, they could endure a sharp fall in energy prices as supply and demand pressures mount.

Things are looking gloomy as the OPEC+ cartel prepares to raise production, demand for renewable energy climbs, and crude shipments to China continue to lag.

Both OPEC and the Energy Information Adminstration (EIA) have cut their demand forecasts recently. And a fresh Reuters poll shows that experts think Brent crude will average $80.55 per barrel in 2024 and $76.61 next year. Both are downgrades from earlier estimates.

An escalation in the Middle East conflict could well push prices past these forecasts. But on balance, the picture is pretty bleak for oil values. And this is especially problematic for BP given its poor refining margins.

BP’s struggle to reduce its $24bn net debt pile is another big threat to its share price. Given the poor outlook for oil prices and the firm’s cash-sapping operations, this could have big consequences for future share buybacks and dividends.

Should you buy Games Workshop shares today?

Before you decide, please take a moment to review this first.

Because my colleague Mark Rogers – The Motley Fool UK’s Director of Investing – has released this special report.

It’s called ‘5 Stocks for Trying to Build Wealth After 50’.

And it’s yours, free.

Of course, the decade ahead looks hazardous. What with inflation recently hitting 40-year highs, a ‘cost of living crisis’ and threat of a new Cold War, knowing where to invest has never been trickier.

And yet, despite the UK stock market recently hitting a new all-time high, Mark and his team think many shares still trade at a substantial discount, offering savvy investors plenty of potential opportunities to strike.

That’s why now could be an ideal time to secure this valuable investment research.

Mark’s ‘Foolish’ analysts have scoured the markets low and high.

This special report reveals 5 of his favourite long-term ‘Buys’.

Please, don’t make any big decisions before seeing them.

Claim your free copy now

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended Lloyds Banking Group Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Hand flipping wooden cubes for change wording" Panic " to " Calm".
Dividend Shares

2 ‘safe’ LSE dividend stocks to consider as global markets sell off

As global markets experience high levels of volatility due to economic uncertainty, investors are piling into these ‘safe-haven’ dividend stocks.

Read more »

Investing Articles

US stock market rout: an unmissable opportunity for investors?

His tech-heavy portfolio has been smashed by Trump’s tariffs. However, Dr James Fox believes there could be some opportunities in…

Read more »

Investing Articles

After a 13% ‘Trump tariff’ fall, is the Barclays share price too cheap to miss?

Does the Barclays share price fall mean we should all panic and run screaming from the stock market? Nah, of…

Read more »

Mature Caucasian woman sat at a table with coffee and laptop while making notes on paper
Investing Articles

2 investment trusts to consider for a Stocks and Shares ISA

These two investment trusts have a different focus -- but our writer sees both as worth considering, one more for…

Read more »

Investing Articles

Deutsche Bank reiterates Buy rating on 9.6% yielding FTSE 250 stock that was “most shorted in UK”

Our writer investigates why a major broker remains optimistic about a FTSE 250 stock that was once the most shorted…

Read more »

Investing Articles

2 things to remember when stock markets are turbulent

US trade policy has rattled the stock markets in New York, London and elsewhere. Our writer outlines a couple of…

Read more »

Investing Articles

Are Trump’s tariffs a once-in-a-lifetime chance for ISA investors to get rich?

The £20,000 Stocks and Shares ISA limit will reset on 6 April. Smart investors could use current market volatility to…

Read more »

Investing Articles

Here are the latest Persimmon share price and dividend forecasts

Our writer looks at the latest forecasts for the Persimmon share price and considers what level of dividend the stock…

Read more »