2 FTSE 100 stocks that could outperform the index in 2025

Jon Smith flags up a couple of FTSE 100 stocks that have strong momentum right now and have beaten the index performance this year.

| 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.

So far in 2024, the FTSE 100 is up 6%. Within the index, some stocks have obviously done better or worse than this benchmark. Looking ahead to 2025, I think the index will likely gain between 6% and 10%. Using that assumption, here are two FTSE 100 stocks for investors to consider that could provide higher returns.

Continued financial beats

The first company is Next (LSE:NXT). Over the past year, the retailer has enjoyed a 22% jump in the share price, well above the FTSE 100 performance.

One factor that has helped to drive the stock higher has been strong financial performance. On several occasions this year, the business has raised its outlook and future revenue expectations due to demand. For example, in late October a trading update showed that full-price sales in Q3 were up 7.6% versus last year. This was 2.6% ahead of the guidance for the quarter of a 5% increase. As a result, the business increased the guidance for Q4 sales.

What’s encouraging for investors is that business growth is coming from all divisions. This bodes well for 2025, as even if one area starts to slow down, other parts of the group can help to pick up the slack. Interestingly, one standout area of growth recently has been overseas sales.

Some will flag up the price-to-earnings ratio as a potential risk. At 14.96, it’s true that this is above my fair value benchmark ratio of 10. Yet I wouldn’t call the stock overvalued. The FTSE 100 average ratio is 15.5, so there could still be room for the share price to rise next year before it starts flashing red.

However, one risk is that Next is sensitive to the financial status of the shopper on the street. If inflation kicks higher next year or interest rates don’t get cut as much, people could feel the pinch and cut back on spending at Next.

Created with Highcharts 11.4.3Next Plc + Experian Plc PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

Global growth fuelling optimism

Another company to consider is Experian (LSE:EXP). The stock has jumped by 13% over the last year, as the growth firm continues to push forwards in North and Latin America.

Last month, H1 results showed revenue growth of 7% versus the same period last year. Guidance for 2025 is set at a 6%-8% revenue increase. If this can be met, then the share price could continue to tick higher next year, reflecting the better realised financial results.

Aside from pure numbers, the stock could also benefit from continued product enhancements. It’s making a push in artificial intelligence (AI), allowing the data analytics platform to have extra features that existing customers can make use of. This should help customers to be more sticky for Experian due to the added benefits.

One concern investors might have is the rapid push on acquisitions. I can count six different purchases or mergers that were noted in the H1 presentation. This is a lot to juggle at one time and could act as a distraction to management.

Yet I think both stocks have the potential to beat the FTSE 100 index next year based on the growth from this year. Both could be worth considering for investors.

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.

Jon Smith has no position in any of the shares mentioned. The Motley Fool UK has recommended Experian 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 Growth Shares

Investing Articles

3 world-class stocks to consider buying, while they’re ‘on sale’

Looking for stocks to buy? These three all have attractive long-term prospects and are currently trading 20% or more below…

Read more »

Investing Articles

Is this an unmissable opportunity to buy Nvidia stock?

Nvidia stock is down 33% from its peak, driven by tariffs and geopolitical pressures. Despite this, some investors may spy…

Read more »

Runner standing at the starting point with 2025 year for starting in new year 2025 to achieve business planing and success concept.
Investing Articles

Up 50%? The Aston Martin share price forecast is mind-blowing! 

If analysts are right, the Aston Aston Martin share price could absolutely rocket in the year ahead. Harvey Jones says…

Read more »

Investing Articles

Up 279% in 5 years, could Meta stock keep soaring?

Meta stock has more than tripled in five years. This writer sees lots to like about the business but also…

Read more »

Young Caucasian man making doubtful face at camera
Investing Articles

2 popular UK growth stocks I wouldn’t touch with a bargepole in today’s market

Buying growth stocks can deliver market-beating returns, but this FTSE 250 pair doesn't look like a convincing investment for our…

Read more »

Hand of person putting wood cube block with word VALUE on wooden table
Investing Articles

Around a 1-year high, is there enough value left in Next’s share price to make it worth me buying?

Next’s share price has risen a lot in eight months, but there could still be a lot of value left…

Read more »

Investing Articles

The Rolls-Royce share price has fallen! Is this the moment investors have been waiting for?

Even the Rolls-Royce share price can't escape current stock market volatility, falling slightly over the last week. Should investors consider…

Read more »

Investing Articles

At a 52-week low but forecast to rise 73%! Is this growth share the FTSE’s top recovery play? 

This FTSE 100 growth share has taken an absolute beating over the past two years but Harvey Jones says the…

Read more »