With thousands of companies to pick from, finding winning investments in the stock market can be quite an arduous task. That’s why many investors like to ‘cheat’ and seek advice from professionals and analysts. Among these, the investment bank Peel Hunt has quite a reputation for success.
As 2024 was about to kick off, its team of analysts revealed its top picks for the coming year. And while 12 months isn’t long enough to properly judge performance, the recommendations were successful at beating the FTSE All-Share.
Skip ahead, and the same team of analysts have released their latest picks for 2025. So let’s take a look at some of their highest conviction ideas.
Stock market leaders in 2025?
Peel Hunt’s 2025 list of recommendations included Domino’s Pizza Group (LSE:DOM), DiscoverIE Group, and Marks & Spencer. So should investors consider these enterprises right now?
Even with all the knowledge and insights professionals have at their fingertips, mistakes still happen. The stock market can be quite unpredictable in the short term. So it’s paramount that investors discover exactly what they’re getting into. With that in mind, let’s take a closer look at the first business on this list, Domino’s Pizza.
Digging deeper
Peel Hunt’s excitement surrounding the pizza franchise chain is linked to management’s expansion plans. Hunt analysts believe the company will successfully expand its store count to 2,000, boosting earnings to £200m in the process. For reference, those figures currently stand at 1,375 and £138.1m respectively.
If these projections prove accurate, the firm has placed a share price target of 425p. Compared to where the shares are trading today, that represents a 57% potential gain. However, while that’s obviously exciting, it’s important to recognise the risks attached to this opportunity.
Not all analysts agree with Peel Hunt’s conclusion. In fact, one firm has projected the stock could fall to 250p moving forward. That’s because a few things have to go right for management to hit its goals. Expanding the store count to 2,000 will be heavily dependent on franchisee buy-ins, which isn’t guaranteed, especially in a higher interest rate environment.
What’s more, Domino’s isn’t the only pizza company attempting to capitalise on the UK and Irish fast food markets with stiff competition coming from Pizza Hut and Papa John’s. If food quality starts to suffer or the firm doesn’t adapt its menu to changing consumer tastes, Domnio’s future growth could fall short of analyst projections.
The bottom line
Given the firm’s track record and the improving relationship with franchisees, Domino’s Pizza seems worthy of a deeper dive from investors looking for growth opportunities in 2025. The same might be true for the other businesses on this list.
Marks & Spencer recently ran into some — ongoing — trouble following a cybersecurity breach. But this might just be a speed bump that’s created a buying opportunity. Similarly, DiscoverIE also seems to show promising growth avenues to explore.
But like with all investments, nothing is ever risk-free. And investors need to do their due diligence to uncover what could go wrong as well as what could go right.
