While the FTSE 100’s risen significantly this year, not every stock in the index has performed well. As I write this, in mid-December nearly a fifth of shares in the index were down 10% or more for the year.
Here, I’m going to highlight five stocks that performed really badly in 2025 but could potentially rebound in 2026. Let’s dive in.
Five Footsie dogs with recovery potential
Let’s start with alcoholic beverages giant Diageo. This stock’s had a dreadful year. Weak consumer spending, US tariffs, and concerns about changing drinking habits have been some of the drivers of the poor performance.
I reckon we could see the green shoots of a recovery in 2026 though. I expect new CEO Dave Lewis to start making moves to boost performance. Meanwhile, lower interest rates in the US and globally could lead to more disposable income.
More disposal income could also give JD Sports Fashion a boost. It’s struggled this year as consumers have reigned in their spending. If we were to see spending pick up a bit, I wouldn’t be surprised to see the share price bounce as the stock looks very cheap at present (it’s one of the cheapest shares in the Footsie today).
In the tech space, one Footsie name that has underperformed is London Stock Exchange Group (LSE: LSEG). It seems investors are concerned that AI and automation are going to hurt the financial data company’s business model. But I reckon in 2026, this won’t be the case and that the company’s AI solutions are actually driving growth.
Another tech company that’s bombed this year is Rightmove. It’s quite astonishing that this one is in the red as it actually received a takeover offer during the year. It seems investors are concerned about AI disruption here too. I think the fears are overblown though.
Finally, we have Marks and Spencer. This year, its profits have been hit by the cyberattack the company faced in April. Operational performance next year should be better.
My pick of the bunch
I believe all of the shares are worth considering for a portfolio as we head towards 2026. All are solid companies trading at attractive valuations.
But my pick of the bunch is London Stock Exchange Group. It’s forecast to generate a decent level (11%) of earnings growth next year as it rolls out AI solutions to banks and investment managers.
Meanwhile, its valuation looks very attractive for a data company. As I write this, the price-to-earnings (P/E) ratio is under 20.
Note that the average analyst price target is 12,500p. That’s miles above the current share price.
It’s worth pointing out that automation in the financial industry is an issue to monitor. This could lead to less licenses that the company can charge for.
All things considered though, I see a lot of potential here and believe it’s worth a closer look. But it’s not the only Footsie stock that looks attractive to me as we head towards 2026.
