Cheap shares like this FTSE bank could help ISA investors get rich in 2025

The US stock market looks expensive and Harvey Jones is backing the UK instead. He says the FTSE 100 is full of cheap shares like these five potential big winners.

| 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.

The FTSE 100 a made a strong start to 2024 but the final months of the year were bumpy. A total return of around 10%, including dividends and share buybacks, is roughly double the yield from cash and bonds. But it was overshadowed by stellar US performance.

Wall Street has been going great guns for the last decade, driven by the almost unbelievable performance of mega-cap tech stocks like Nvidia and Tesla.

Yet that the UK has had its winners too, with British Airways-owner International Airlines Consolidated Group and jet engine maker Rolls-Royce growing 95% and 90% respectively this year. Both have benefited from the post pandemic recovery in the airline sector.

Should you invest £1,000 in Games Workshop 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 Games Workshop made the list?

See the 6 stocks

2024 was much better than it looks for UK stocks

While most investors measure performance by how well a country’s main index has done, it’s not so relevant for people like me who prefer to pick their own stocks rather than buy trackers.

While it can be more rewarding, it’s also risky. My best FTSE 100 performer this year is private equity specialist 3i Group, up 50%. My worst is JD Sports Fashion, down 40%. So which would I buy today?

To me, it’s a no-brainer: JD Sports. Its shares have taken a beating as consumer spending is squeezed, key partner Nike struggles, the Budget hikes employer’s national insurance bills, and Donald Trump threatens trade tariffs.

Yet JD Sports is now incredibly cheap, trading at eight times earnings. It looks like a bargain buy with great recovery prospects. And it’s not the only FTSE 100 stock that fits that profile.

Lloyds Banking Group (LSE: LLOY) has sold off in recent months, as its Black Horse division got embroiled in the motor finance mis-selling scandal.

Lloyds could be a winner in 2025

Lloyds set aside £450m for potential fines and customer compensation, but that may not be enough. RBC Capital Markets warned Lloyds could take a £3.2bn hit. It put FTSE 100 rival Barclays down for a mere £400m.

The Lloyds share price is up around 12% year to date, with the trailing dividend yield of 5% lifting my total return to 17%. Investors in Barclays have enjoyed a total return of 70%. The mis-selling scandal isn’t the only difference between the two, but it’s a big one.

Yet I’m sticking by my Lloyds shares and would buy more inside my Stocks and Shares ISA if I had the cash. They look cheap, trading at 7.1 times earnings, while the forward yield is a bumper 6.1%. Shareholder payouts look solid, covered 2.1 times by earnings.

Lloyds faces risks. The motor finance scandal could turn into a real car crash. A slowing UK economy could drive up debt impairments. Falling interest rates could cut margins. So it goes with every stock.

The all-conquering US faces risks too. Whether the Trump administration succeeds or fails, one thing is certain. It’s going to be bumpy. Plus the S&P 500 is roughly twice as expensive as the UK to start off with. I’m hoping the FTSE 100 will close the gap in 2025, with cut-price stocks like Lloyds leading the charge.

But this isn’t the only opportunity that’s caught my attention this week. Here are:

5 Shares for the Future of Energy

Investors who don’t own energy shares need to see this now.

Because Mark Rogers — The Motley Fool UK’s Director of Investing — sees 2 key reasons why energy is set to soar.

While sanctions slam Russian supplies, nations are also racing to achieve net zero emissions, he says. Mark believes 5 companies in particular are poised for spectacular profits.

Open this new report5 Shares for the Future of Energy — and discover:

  • Britain’s Energy Fort Knox, now controlling 30% of UK energy storage
  • How to potentially get paid by the weather
  • Electric Vehicles’ secret backdoor opportunity
  • One dead simple stock for the new nuclear boom

Click the button below to find out how you can get your hands on the full report now, and as a thank you for your interest, we’ll send you one of the five picks — absolutely free!

Grab your FREE Energy recommendation now

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.

Harvey Jones has positions in JD Sports Fashion, Lloyds Banking Group Plc and Rolls-Royce Plc. The Motley Fool UK has recommended Barclays Plc, Lloyds Banking Group Plc, Nike, Nvidia, Rolls-Royce Plc, and Tesla. 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

Here’s the dividend forecast for Rolls-Royce shares as Trump rocks the markets

Rolls-Royce shares have joined in the volatility over the past week. However, with the direction being largely downwards, the dividend…

Read more »

Young Asian man drinking coffee at home and looking at his phone
Investing Articles

Dividend yields of up to 11%! Here are 3 UK passive income stocks to consider

Searching for ways to supercharge your passive income with UK dividend stocks? Here are three that have grabbed our writer's…

Read more »

Young Caucasian woman at the street withdrawing money at the ATM
Investing Articles

£10,000 invested in NatWest shares at the start of 2025 is now worth…

NatWest shares surged into 2025, but things have become a little more complicated in recent weeks. Dr James Fox explores.

Read more »

Investing For Beginners

Why the FTSE 250 could outperform the FTSE 100 for the rest of the year

Jon Smith explains why the FTSE 250 could do better than its big brother when factoring in domestic exposure and…

Read more »

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

Tariff fears send the Lloyds share price tumbling, but the dividend yield is climbing

Just when the Lloyds Banking Group share price had been rising steadily, along comes a global upheaval to knock it…

Read more »

Bus waiting in front of the London Stock Exchange on a sunny day.
Investing Articles

Here’s how a stock market crash could help an investor retire years early

A stock market crash can be alarming -- but for the well-prepared investor, it can also be an exceptional opportunity…

Read more »

Investing Articles

1 key fact to remember in this stock market correction

This writer takes a look at a FTSE 100 investment trust that is catching his eye after the recent massive…

Read more »

Investing Articles

I was wrong about the Tesla stock price!

Tesla stock's been affected more than most by ‘Liberation Day’. But our writer has other concerns about Elon Musk’s company.

Read more »