Even with the FTSE 100 climbing by double digits in 2025, there are still plenty of cheap stocks among British large-caps just waiting to be snapped up. But that may soon change. Why? Because the analyst team at The Economy Forecast Agency have projected that the UK’s flagship index could reach 12,494 by this time next year.
If this forecast’s correct, it means the UK’s leading stocks could be set to deliver a staggering 28.8% return in just 12 months. But that’s just the average. For cheap stocks, the profits could be even greater.
The power of buying low
A near-29% stock market surge is a pretty aggressive projection. And a lot of things have to go right for this to become reality, most crucially a successful rebound in British economic growth.
That’s ambitious. But to be fair, UK shares are some of the cheapest in the world right now. And even if the rebound doesn’t happen, these discounted valuations mean that investors are spoilt for choice when it comes to phenomenal passive income opportunities.
One cheap stock I’ve already added to my portfolio is LondonMetric Property (LSE:LMP). It has a 6.4% dividend yield and has been hiking shareholder payouts by an average of 6% every year for the last 10 years. But that’s not the only reason why I became a shareholder.
Incoming real estate recovery
LondonMetric’s a commercial landlord and a real estate investment trust (REIT) with a diversified portfolio of properties spanning warehouses, retail stores, hospitals, and even theme parks.
It specialises in long-term triple net lease agreements. This means that tenants are ultimately responsible for any maintenance, insurance, and taxes. And since the firm deals exclusively with large-scale enterprises, the average lease duration is around 17 years, with 67% of rental income inflation-linked or receiving fixed annual uplifts.
This powerful financial position is how LondonMetric has been able to continue growing its cash flow and hiking shareholder dividends despite the downturn in the real estate sector.
However, now that interest rates are starting to be cut, the group’s share price has also begun slowly moving back in the right direction. And that trend could soon start accelerating.
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What could go wrong?
While interest rates are steadily falling, this process could take far longer than expected. Consequently, my hunch of an incoming rebound within the LondonMetric share price may not materialise in 2026.
There’s also a more pressing near-term threat – the Autumn Budget. There’s a lot of uncertainty surrounding the government’s upcoming fiscal policy changes. Rumours of tax hikes on the middle class could drastically undercut economic growth, even if interest rates fall as expected. But for LondonMetric, a larger threat is the potential for property taxes.
Even though almost all of the group’s tenants would be responsible under the triple net lease structure, this additional financial burden, combined with weak economic conditions, could translate into lease cancellations, non-renewals, and lower rental income.
The bottom line
With occupancy at 98%, LondonMetric has some wiggle room to absorb some cash flow disruption. But with investors already reluctant to spend on real estate, this stock, while cheap, could be in for a bumpy ride.
Nevertheless, its long-term outlook remains impressive, in my opinion. That’s why, despite the near-term risks, I think investors may want to mull this one over.
