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No one really knows where UK shares will go in 2025, but I can see several attractive value stocks for bullish investors to consider adding to their portfolios now in the hope that the markets have a stellar year.
Recovery is underway!
Luxury watch seller Swiss watches (LSE: WOSG) is an example of a stock that looks poised for a strong recovery. In fact, you could say that the recovery has already begun. After enduring a tough few years thanks to a cost-of-living crisis, the stock is up 34% in the last month alone!
This momentum was no doubt helped by some reassuring half-year results in early December. Back then, management reported 4% revenue growth thanks to a “encouraging improvement in trade in the second quarter“, attributed in part to better demand in the United Kingdom and the United States.
There is still time to consider the purchase.
I think there could be even more potential ahead, especially since the stock is still trading at a price-to-earnings (P/E) ratio of 14. It's not as low as it was a few months ago, but it's below the P company average. /E of 19 in the last five years. It also doesn't feel particularly excessive if (and here's the mighty 'if') the UK economy holds firm next year.
Whether the latter will happen is open to debate. If inflation rebounds, Swiss Watches' share price will likely move sideways, at best. There is also no dividend stream to compensate investors for sitting still.
However, if inflation returns in line with the Bank of England's 2% target, we could see further interest rate cuts. This should contribute to an improvement in consumer confidence, possibly leading to improvements in profits for the Leicester-based company.
very cheap
FTSE 100 member JD Sports Fashion (LSE: JD) is another company that I think offers great value. Its forecast P/E ratio for FY26 (as of February) sits at a surprisingly cheap seven. Again, that looks very attractive considering the company's five-year average is a whopping 20.
This is not to say that the £5 billion cap does not face a number of challenges at the moment. For example, one of the main brands it sells: the American giant Nike – is having a nightmare year as smaller, more innovative rivals like In and Upset They have taken market share.
Overseas growth
But can the above be considered a long-term problem? I'm skeptical, especially if Nike's new(ish) CEO Elliott Hill delivers on his promise to revitalize the business. More broadly, the future of the global sportswear market looks strong.
Indeed, JD Sports appears particularly well equipped to weather any storm thanks to its multi-brand, multi-channel offering and rapid growth overseas. Earlier this year, it acquired US rival Hibbett as part of a strategy to expand its presence across the pond.
I also think it's quite comforting that there appears to be very little interest in the company from short sellers. In other words, not many traders seem willing to bet that the stock price will continue to fall.
Buying a stock when no one else will has the potential to prove lucrative in the long run. Although there's a chance things could get off to a bad start if January's Q4 trading update doesn't impress, that could be the case here.
