The FTSE 250 index of UK stocks has risen 21% over the last year. And City analysts are confident many of its constituents will leap during the next 12 months.
Take Hochschild Mining (LSE:HOC) and Aston Martin Lagonda (LSE:AML). Some brokers are confident they will rise by 46% or more over the coming year. The question is, how accurate are these bullish forecasts likely to be?
Hochschild Mining
Precious metals miners like Hochschild have had a blip in recent weeks. Why? A resurgent US dollar has put gold and silver prices on the back foot. When the buck rises, it becomes more expensive for investors outside the States to buy and hold metal.
City analysts, though, are unanimous that Hochschild shares will rebound. The 10 who have ratings on the miner think it’ll rise 24% in value over the next year, to 807p. One is even tipping its shares to reach 951p, up 46% from today’s levels.
It’s possible the dollar will continue rising if the Iran War continues, pushing up inflation and US interest rates. But the outlook for precious metals could stay strong, and by extension for this FTSE 250 stock.
Safe-haven metals typically rise in value when inflationary pressures rise. It’s one reason why gold’s powered to dozens of record highs in recent years. There’s also rising geopolitical instability, worsening economic data and financial market volatility that might supercharge these commodity prices again.
Yet despite all these positive drivers, Hochschild shares still look cheap. They trade on a price-to-earnings (P/E) ratio of 9.8 times. In my view, this sort of low valuation provides plenty of scope for the miner to recover from its recent dip.
Aston Martin Lagonda
Could things also be looking up for Aston Martin’s share price? One City analyst is forecasting a stunning 54% rise over the next 12 months, to 65p.
The average share price target isn’t as exciting, at 50.7p. But that average of 12 separate forecasts still suggests an impressive 20% rise from today’s levels.
So what could drive the sports car maker’s shares higher? A sharp recovery in sales volumes would be needed (these dropped 10% over the course of 2025). With brilliant brand power and the best line-up of cars in its 113-year history, it’s not out of the question.
That said, this is a highly unlikely scenario in my opinion. Demand for expensive vehicles is already in the doldrums, especially in Aston’s key Chinese market. And the Iran War is making the market more difficult by raising inflation and cooling economic growth.
These chilly conditions are especially worrying given the company’s weak balance sheet. Debt is still rising, and was £1.4bn at the end of December. While it’s slashing costs to stop losses widening further and shore up its financial foundations, the gloomy market outlook means things are still looking bad for Aston and its share price.
In my view, investors should consider avoiding Aston Martin and take a look at Hochschild shares instead.
