The FTSE 100 rose an impressive 22% over the course of 2025. But many of the UK’s blue-chip shares endured a far bumpier ride.
Barratt Redrow (LSE:BTRW) and Sage Group (LSE:SGE) saw their share prices fall by double-digit percentages last year. Risks remain in the New Year. But I’m confident that improving trading conditions — combined with their ultra-low valuations — could see them outperform the FTSE index in 2026.
Want to know why? Read on.
Building momentum
Fears of a slow recovery in UK home sales caused Barratt Redrow shares to slump in 2025. Over a 12-month horizon, Britain’s biggest housebuilder has dropped 13% in value.
I felt at the time that 2025’s price drop was unjustified. House price data today (19 January) has reinforced my view, illustrating the underlying strength of the market.
According to Rightmove, average asking prices have risen 2.8% in January. This was the biggest ever start-of-year jump, and the largest monthly increase since 2.8%.
Might this be a one-off spike? I’m confident it could actually mark a turning point, and expect sales and price momentum to improve. Further Bank of England interest rate cuts are in the pipeline to boost buyer affordability. There’s also a bloody war being fought out as to which lender can provide the best mortgage product.
Barratt’s rock-bottom share price boosts my prediction of a share price recovery this year. At 375.7p, the stock trades on a forward price-to-book (P/B) ratio of 0.6.
That’s well below the 10-year average of 1.1. And it shows the FTSE 100 builder trading at a healthy discount to the value of its assets.
Like any share, Barratt Redrow comes with risk. My own personal concern is a sharp downturn in the UK economy that offsets the benefits of falling interest rates. Still, on balance, I think it can rebound sharply following recent weakness. And over the longer term, I think it will steadily rise as improving planning rules help it raise volumes to capitalise on the booming domestic population.
Another FTSE 100 bargain
Sage Group (LSE:SGE) endured even meatier share price losses in 2025. The software supplier is now down 21% over 12 months, falling as the market reevaluated its growth prospects.
This FTSE 100 share’s a leader in the accounting, payroll, and human resources software sector. The problem is that sales growth — while still impressive last year — failed to meet market expectations. Recurring revenues jumped 11% in the financial year to September.
With fears over an AI bubble growing, too, Sage faced a perfect storm that pulled its shares lower. The company’s investing heavily in artificial intelligence, and launched products like its Sage Copilot tool in 2025.
However, I think this drop could represent an attractive dip-buying opportunity for long-term investors. In fact, I think Sage’s share price could rebound as soon as this year. Business spending could rise sharply as interest rates fall and economic activity picks up. And those AI tools give it enhanced power to capitalise on any uplift.
Sage trades on a forward price-to-earnings (P/E) ratio of just 21.3 times. That’s below a reading of around 34 times for the wider European information technology sector, and makes the share worth serious attention from value investors.
