Two UK shares in my Self-Invested Personal Pension (SIPP) have put on a strong show this year, and I’ve got high hopes for 2025.
The first is engineering and construction specialist Costain Group (LSE: COST). Its shares are up a stunning 65.62% over the last 12 months. I bought them on 29 November last year and I’m personally up 71%, so I’m a happy bunny.
The Costain share price plunged as delayed and disputed infrastructure products forced the board to issue two profit warnings, in 2019 and 2020. Costs overran and it got embroiled in contract disputes.
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The share price could do it again in 2025
I felt the worst was over last year and the company had one big factor in its favour – a fat and juicy bank balance. It boasted £194m of net cash against a market-cap of just £188m. With interest rates high, the money was rolling in, simply by leaving that pile in the bank. It’s since helped fund a £10bn share buyback.
Costain has continued to win contracts this year, driving the order book up to £4.3bn. On 4 December, it secured another worth £400m, with HS2.
Despite the share price surge, Costain still looks decent value, trading at 8.44 times earnings. Currently, three analysts have one-year share price forecasts, and they’ve set a median target of 145.5p. That’s up 38.6% from today’s 105p. All three label Costain shares a Strong Buy.
Costain isn’t without risks. It relies on a steady stream of large public infrastructure products and if they don’t come through sales will slump. That’s a worry given that the state of the UK’s finances.
Earnings can be bumpy as old projects end and new ones begin. Especially if there’s a gap between the two. Another risk is that it underprices when pitching for business. But I remain optimistic given the sound fundamentals.
Warpaint shares are on the march
Colour cosmetics specialist Warpaint (LSE: W7L) is another big portfolio winner. Its W7 and Technic brands are sold at Tesco and major retailers in the US and Europe, topped up by online sales from its own site.
Shares in this AIM-listed enterprise are up 64.92% over the last year. Over five years they’re up a staggering 507%. Sadly, I didn’t buy until 16 January this year, so I’m sitting on a relatively modest 28.9% gain.
On 29 November, broker Berenberg added Warpaint to its list of top stock picks for 2025. The same day, RBC Markets forecast revenue growth of around 13% a year through to 2026, while praising its “accessible, on-trend, quality cosmetic range at an affordable price”.
Affordability is the key word. That’s helped Warpaint grow steadily throughout the cost-of-living crisis.
Beauty’s a fickle business, of course. Another worry is that growth prospects are priced in, with the shares trading at 29.18 times earnings. They spiked after Warpaint posted record first-half sales and higher margins on 17 September, but soon retreated.
Warpaint has traded sideways for the last six months but I expect it to be back on the warpath in 2025.
