As December slides into view, budgets can become stretched. Year-end spending, from Christmas gifts to festive dinners, can add up. So buying shares in large UK companies might not be top of many shopping lists.
But although the FTSE 100 index has hit new levels this year, I still think some of the shares in it look like potential bargain buys.
Looking back on 2024
I expect that, as we draw towards the end of another year and many investors start coming up with ideas for 2025, a lot of British shares will receive renewed attention from potential shareholders as they weigh the merits of investing.
That does not mean they will necessarily go up in price. After all, some UK shares are priced the way they are because their business performance has been disappointing. In my own portfolio, alas, both boohoo and S4 Capital fit that description.
But by potentially getting ahead of the crowd now, I hope I may be able to snag some bargain shares I am optimistic could do well in 2025 – and beyond (after all, I am a long-term investor).
Identifying potential growth drivers
As an example, consider one UK tech share I have added to my portfolio this year, Filtronic (LSE: FTC). The company makes sophisticated electrical components for a range of applications.
While the share price remains in pennies it has already soared by 252% so far this year.
Now, as I bought in the summer, I missed most of that dramatic gain. In fact, the share is still selling for roughly the price I paid for it. However, one of the things I like about this UK share is that I see a number of possible drivers for substantial growth in its business (and hopefully therefore its valuation too) next year and beyond.
One is its relationship with rocket company SpaceX, which has inked multiple deals with Filtronic this year. As the US company extends its constellation of Internet-providing satellites, I see further scope for Filtronic to sell more of its products.
In just the past few months alone, Filtronic has announced a number of developments I see as enabling substantial growth. It has relocated its factory in County Durham to a larger, purpose-built facility. It added another production line in July and planned a further one this month. It has also opened a new engineering design centre in Cambridge.
Bargain hunting never stops!
Of course, spending money scaling up involves a risk that losses could balloon if orders do not materialise at a high enough level.
But Filtronic, a share that has risen 762% in five years, still looks like offering potentially good value to me if the company’s growth ambitions are realised. I plan to keep holding the share.
In my view, there is never a bad time to buy great companies at attractive prices. That includes the final month of the year, even if investors’ attention is not on the stock market. I will keep looking for shares to buy in December!
