The FTSE 100 rose over 6% in 2024. The FTSE 250 was only just behind it, lifting over 5%. Plenty of big-name constituents fared poorly, of course — but there are some stocks that our free-site writers believe can easily regain their 2024 losses this year, presenting possible value entry points right now!
B&M European Value Retail
What it does: Operates various retail outlets in the UK and France, including B&M, Heron Foods and B&M Express.
By Mark David Hartley. Looking at a B&M European Value Retail (LSE: BME) price chart, it seems to follow a cyclical pattern of growth and then recovery. Now near the bottom of a dip, it looks ready for another growth period. But past performance doesn’t guarantee anything. A better gauge is the company’s valuation. The stock exhibits good value, with an average price-to-earnings (P/E) ratio of 13 for the past few years. Combined with projected earnings growth of 11.2%, it looks set for a good 2025.
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There are some risks, of course. With over £900m in debt and about £740m in equity, it has a slightly strained balance sheet. That could threaten profits if earnings slip and interest eats into profits. Also, recent results weren’t great, with earnings down 25% and a profit margin of only 4.6%. Despite this, return on equity (ROE) is forecast to be 69.3% in three years.
Mark David Hartley does not own shares in B&M European Value Retail.
Burberry
What it does: Burberry is a London-based luxury fashion house, with a high-profile global brand.
By Alan Oscroft. Burberry Group (LSE: BRBY) shares were down much as 60% at one point in 2024. They’ve picked up from the bottom, but are still well below the highs of early 2023.
Some think there’s further to fall. But I’m going to go out on a limb and say I think we could see a solid recovery starting in 2025.
There’s a loss per share on the cards for this year. But analysts predict a return to earnings growth that could put the price-to-earnings (P/E) ratio at around 20 in 2026.
That might still look high, and there might not be much safety in that valuation. And the fashion business is at far more risk from sentiment than just about any other.
But I was recently reminded of why I think this is too iconic a fashion brand to not bounce back. Watching something on YouTube set in China, what did I see? Young professionals wearing Burberry check, in November 2024.
Alan Oscroft has no position in Burberry.
Burberry
What it does: Burberry is a UK-based global luxury goods manufacturer, retailer and wholesaler
By Paul Summers. To say that 2024 has been a bad year for luxury brand Burberry is putting it mildly. An extended cost-of-living crisis has hammered sales and, quite understandably, investor sentiment. Back in September, this pushed the shares down to lows not seen since 2010.
As dire as things seem, I’m encouraged by new CEO Joshua Schulman’s ‘back to basics’ strategy. This includes targeting £40m in annual cost-savings and re-focusing on core products such as scarves and trench coats.
Sure, Burberry can do everything right and still be impacted by things beyond its control, such as a stuttering Chinese economy and/or new import duties to the US.
But I have trouble believing that a company with such a rich heritage won’t recover its mojo over the long term. Actually, I wonder if the biggest risk facing holders right now is being snapped up on the cheap.
Paul Summers has no position in Burberry
Kainos Group
What it does: Kainos is a software and services business that helps companies digitalise and automate operations to boost efficiency.
By Zaven Boyrazian. Kainos (LSE:KNOS) has long been a tech stock darling in the UK. But in recent years, the digitalisation expert has seen its growth take a hit, and with it, its share price.
Uncertainty surrounding the political landscape in the UK, as well as higher interest rates, has put a lot of corporate and public spending on hold. Needless to say, that’s been less than ideal for Kainos.
However, with a new government in power and the national budget outlined paired with steadily falling interest rates, the group’s operating environment is steadily improving. And with UK AI spending expected to surge in 2025, Kainos’ impressive track record of double-digit growth may be on the verge of returning.
Kainos isn’t the only enterprise looking to profit from this incoming catalyst. And the exact timing of when customers will start ramping budgets back up is unknown. However, with shares trading firmly below their historical average P/E ratio, shares of Kainos look relatively cheap considering the potential growth that could be just around the corner.
Zaven Boyrazian owns shares in Kainos.
