After a largely positive year for markets, there are plenty of FTSE stocks I think stand a good chance of delivering the goods again in 2025. But there are also a few I’ll be steering clear of.
Let’s look at two examples of the latter.
Serial loser
I’ve been bearish on Aston Martin Lagonda (LSE: AML) ever since it listed at an absurdly-high price back in 2018. To date, it’s lost 97% of supposed value since then.
Based on its last trading update, I can’t see this appalling run of form changing as we move into 2025.
Back in November, the company announced that annual core profit for FY24 was expected to come in somewhere between £270m and £280m. In FY23, it was just under £306m. The luxury car maker attributed this fall to delivery delays of its undeniably gorgeous Valiant model. At the time, it forecast being able to deliver only half of 38 cars by the end of the year.
But it gets worse.
Cash-strapped stock
As I suspected would happen when last running the rule on the company, Aston Martin has also been forced to call on investors for more cash.
Will the most recent request (raising £111m) be the last? I sincerely doubt it. This was already the sixth such raise since chairman Lawrence Stroll’s arrival. And all have only succeeded in diluting the stakes of those already holding.
Of course, low expectations can mean that it might take only a small chink of light for sentiment to turn. Perhaps demand from key markets such as China might improve or supply issues get resolved.
But I’m not prepared to gamble on such a scenario playing out.
Higher costs incoming
Another stock I’m avoiding is FTSE 100 DIY firm Kingfisher (LSE: KGF).
That might sound a bit harsh. After all, the shares of the B&Q owner have climbed almost 9% so far in 2024 — slightly more than the index itself. This outperformance could have been even better were it not for the big dip in the share price since September as investors fretted about the new Labour government’s first Budget.
They were right to be concerned. In November, the company revealed it would need to cough up £31m in FY2025 as a result of chancellor Rachel Reeves’s decision to hike employers’ National Insurance contributions (NICs).
In Kingfisher’s defence, it certainly won’t be the only UK retailer to suffer from this development. But it will place more pressure on what’s already a low-margin business. To compound matters, a higher-than-expected bounce in inflation might also keep a lid on demand for big-ticket items.
A favourite with shorters
Taking all this into account, it makes sense that Kingfisher’s one of the most heavily-shorted stocks out there. As a general rule, a company doesn’t end up on this list unless there are a lot of question marks hanging over it.
Glass half-full, a nice bout of hot weather next year could see the firm shift more outdoor furniture and gardening supplies. A higher-than-average 4.8% forecast dividend yield may also be enough to keep shareholders interested.
But with a fair amount of debt on the balance sheet, I’m still not tempted to get involved.
