Get ready for a FTSE 100 surge!

Analysts forecast double-digit growth for the FTSE 100 over the next 12 months! What’s behind these predictions, and which stocks should investors watch?

| 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.

It’s no secret that the FTSE 100 has been on a rampage over the last two years. Index investors have reaped a chunky 21.2% total return since November 2022, far outpacing the 6% annual average we’ve seen across the past decade. And yet despite this tremendous performance, analysts are still forecasting even more growth on the horizon.

The latest projections from the Economy Forecast Agency put the UK’s flagship index as high as 9,637 points by this time next year. Compared to current levels, that’s a potential 18.6% gain before even counting the impact of dividends.

It might not happen, of course, and forecasts need to be taken with a pinch of salt. But what’s behind this bullish prediction? And which FTSE 100 stocks do I think investors should be paying attention to?

Should you invest £1,000 in Rs Group Plc 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 Rs Group Plc made the list?

See the 6 stocks

Catalysts for growth

Despite what the stock market’s performance indicates, 2024’s been quite an uncertain year for many UK businesses.

Nerves were rising during the run-up to the July general election, given the different economic policies put forward by the Conservative and Labour parties. Then, all eyes turned to the highly anticipated October Budget by the newly elected government. And during all this political uncertainty, pressure from interest rates, even as they dropped, continued to impact businesses’ financials and their decision-making.

But today, most of the political uncertainty has evaporated. And while not everyone is pleased with the latest Budget, the clarity enables companies to make more informed decisions. As for interest rates, they currently stand at 4.75% versus their peak of 5.25% at July.

Another rate cut’s expected in December. But providing inflation remains cool, rates could fall significantly throughout 2025 to an estimated 3.75%. In other words, the cost of debt for households and corporations may be on track to tumble by 30% from its peak. And apart from alleviating pressure on balance sheets, it also helps spark economic growth across the board.

With that in mind, it’s no surprise analysts are bullish for 2025.

What to watch

Even if the best-case scenario occurs, there’s always the possibility that growth is already baked into valuations. As such, the FTSE 100 may still fall short of expectations.

That’s why when looking to capitalise on this trend, I’m zooming in on the stocks that are currently heading in the wrong direction. One company that’s already in my portfolio is Howden Joinery Group (LSE:HWDN).

Over the last 12 months, the fitted kitchen and bedroom specialist has actually performed fairly admirably, rising 25%. Yet, since mid-September, the stock price is down by double-digits. Investor concerns have been rising as the entire home renovation sector’s getting hit hard.

Demand is currently quite weak as families postpone projects into 2025 in anticipation of lower interest rates. And the impact of this is quite clear on Howden’s financials, with year-to-date UK growth sitting at just 1.7%, against its double-digit historical average. And while earnings remain on track, management’s warned they’re likely to fall towards the lower end of guidance.

While frustrating, the firm has more than enough cash to see it through the storm. And with its shares trading lower, an opportunity might have emerged for patient investors to research. After all, when interest rates drop, home renovation should rise.

Should you invest £1,000 in Rs Group Plc 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 Rs Group Plc made the list?

See the 6 stocks

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.

Zaven Boyrazian has positions in Howden Joinery Group Plc. The Motley Fool UK has recommended Howden Joinery 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

Investing Articles

Up 30% in weeks, does the BAE Systems share price still offer value?

The BAE Systems share price has been on a tear over the past couple of months. This writer sees limited…

Read more »

Three signposts pointing in different directions, with 'Buy' 'Sell' and 'Hold' on
Investing Articles

Hunting for shares to buy as the market trembles? Remember this!

After a choppy week in global stock markets, our writer goes back to basics in his hunt for bargain shares…

Read more »

Investing Articles

3 simple principles to help build wealth in an ISA

As a new tax year opens up new ISA allowances for many investors, our writer shares a trio of things…

Read more »

Investing Articles

US trade tariffs: what they could mean for UK shares like Ashtead, Compass Group, and Experian

US trade tariffs continue to rock global markets, and the UK is no exception. Our writer considers how a new…

Read more »

Mindful young woman breathing out with closed eyes, calming down in stressful situation, working on computer in modern kitchen.
Dividend Shares

The Trump slump has smashed these FTSE 100 shares!

After a rough week for US and UK shares, investors have been shaken. But now these FTSE 100 stocks have…

Read more »

Investing Articles

£10,000 invested in Rolls-Royce shares 5 years ago is now worth…

Rolls-Royce shares have been on fire since April 2020. Part of this is the result of pandemic restrictions lifting, but…

Read more »

Young Asian woman with head in hands at her desk
Investing Articles

£10,000 invested in Tesla stock at its peak in 2024 is now worth…

Over the last few months, Tesla stock has lost nearly half its value. Here, Edward Sheldon explores a few takeaways…

Read more »

Investing Articles

Is the S&P 500 heading for an epic stock market crash?

Our writer shares his thoughts on a very crazy time for the S&P 500 and the wider stock market. How…

Read more »