Image source: Getty Images
Compared to the kind of profits made by tech titans across the pond, one could be forgiven for thinking that FTSE stocks have been a losing bet in 2024.
I don't think that's the case at all. I would also say that there are some reasons for investors to consider prioritizing these coasts heading into 2025.
<h2 class="wp-block-heading" id="h-super-year-for-stocks“>Super year for stocks
Well, let's be real. Few fools would suggest not investing in US stocks like NVIDIA and tesla If they could turn back time. Both have achieved magnificent returns in 2024.
Even a S&P 500 The tracker is recording a 24% gain. and this comes after Yesterday's (December 18) drop followed concerns that the Federal Reserve could deliver fewer interest rate cuts in 2025 than initially thought.
But there are also many UK-listed stocks that have done very well.
From FTSE 100there is an engine manufacturer Rolls-Royce and owner of British Airways Consolidated International Airlines. Both have almost doubled in value. That's not bad at all considering all the political turmoil that occurred during the period.
In it FTSE 250there is a trading platform provider CMC Markets (+140%) and review the website Trusted pilot (+118%). The fact that these are two very different businesses shows that not all the winners are concentrated in a single sector.
They also highlight how profitable stock picking can be. The mid-cap index itself has achieved only 4%,
On sale
While some of them may find it difficult to replicate this performance in 2025, there are others that I think still look like great value relative to their quality.
One example investors may want to consider buying is the premium spirits seller. Diageo (LSE: DGE).
Now, 2024 has been a bit stinky for the company. The cost of living crisis has continued to affect sales in some parts of the world. There is also growing concern that an increasing number of young people are simply not interested in consuming alcohol. These things have conspired to drive down the stock price by more than 10%.
Longer-term holders have fared even worse. Since peaking in April 2022, it is down almost 40%!
This seems like an overreaction to me. The world is not suddenly becoming teetotal. Indeed, Guinness It has become so popular recently that UK pubs are in danger of selling out! And Diageo can always push its alcohol-free alternatives to the health-conscious Generation Z.
Additionally, Diageo trades on a forward price-to-earnings (P/E) ratio of 18. That's significantly lower than its five-year average (23). Good trading over the festive period could push analysts to revise their projections.
Buy British?
Of course, no one knows whether Diageo or stocks in general will shine in 2025. Maybe they will. We may all have a terrible year if the (expected) rebound in inflation turns out to be more complicated than previously thought. We just can't say for sure.
But we can be pretty safe in saying that the United States has rarely been this valued, at least when it comes to large-cap stocks. This is likely to moderate returns for a while, pushing cautious investors to diversify their money into cheaper developed markets.
And regardless of what happens in 2025, we can also say that, historically, indices like the FTSE 100 have risen and drifted to the right, increasing investor wealth along the way.
For me, what really matters are those long-term returns.
