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looking for the best FTSE 100 Growth stocks to Buy? Here are two that I think could bounce back this year after a tough 2024 and are worth considering.
Khaki
house builder Khaki (LSE:PSN) started the New Year on the wrong foot. But it is gaining momentum thanks to a series of positive data from the housing market.
I think this could continue if a (likely) drop in interest rates triggers strong pent-up demand in the UK.
New comments today (January 20) right movement affirmed the underlying strength of the housing market at the moment. It showed property prices rose 1.7% in January, marking the biggest price jump at the start of the year since 2020.
For the full year, Rightmove predicts a 4% rise in property prices and an increase in total sales, up to 1.15 million.
This follows a cheerful trading update from Persimmon itself last month. Then, the builder said that “cCustomer inquiries and sales rates have been consistently ahead of the previous year since the spring sales season.“. It also said forward sales rose 8% year-on-year to £1.1bn.
Homebuilders are not completely out of the woods. There is no guarantee that interest rates will fall, which will hinder the ongoing recovery in affordability for home buyers. Cost inflation is also a danger to these companies' profits.
But overall, I think Persimmon, for example, is in good shape to rebound strongly starting this year. City analysts agree with me and forecast earnings growth of 16% in 2025 and 20% in 2026.
I don't think the FTSE company's low valuation reflects these bright prospects. Its price-to-earnings growth (PEG) ratio of 0.8 is below the benchmark that implies a stock is undervalued. In my opinion, this leaves more room for a share price rally.
Ashtead Group
Like persimmon, Ashtead (LSE:AHT) is very sensitive to interest rates and their impact on property markets. In fact, the impact has been worse than expected: the company issued another profit warning in December.
At the time, it cut its full-year sales growth target to between 3% and 5%, from 5%-8% previously.
The rental equipment supplier also faces uncertainty as US President Trump dismisses the idea of new trade tariffs that could cool the domestic economy. Ashtead makes almost nine-tenths of its sales in the United States.
However, as far as the housebuilder is concerned, I think things are generally looking up for Ashtead as central banks respond to falling inflation. That's why City analysts are forecasting 14% profit growth for the financial years to April 2026 and 2027. A 5% drop is predicted for the current financial period.
There are also significant growth opportunities that the FTSE 100 company will be able to exploit in the coming years. One of them is a substantial jump in the number of so-called infrastructure megaprojects scheduled for the coming years.
Ashtead places the total value of these at $974 billion between 2025 and 2027. This represents a significant increase from the $509 billion between 2022 and 2024.
Through its ambitious expansion strategy, Ashtead is also positioning itself to best take advantage of this rebound, as well as the eventual recovery of local construction markets. I expect its share price to rebound strongly in the coming years.
