Are these the best UK shares to watch in January 2025?
A selection of some of the best dividend, growth and value UK stocks to watch this month. These companies have been selected for recent market news.
Going into 2025, the UK’s economic landscape continues to deliver a mixed outlook. GDP growth for 2024 has slowed during the second half of the year and is expected to end the year at 0.9%, but this could increase to 1.2% in 2025.
The labour market is expected to remain stagnant as higher employment costs are expected to cause a slowing pay growth and fewer vacancies. Unemployment is also expected to increase slightly.
Whilst it’s clear that interest rates are on their way down and may fall below the BOE’s target figure of 2% in September 2025, these cuts may be more gradual as higher energy prices and high level of service inflation has driven inflation up to 3.2%. At its next meeting on 19 December the BOE is expected to hold interest rates at 4.75%.
If geopolitical uncertainties ease, these lower rates could positively impact businesses and give them the confidence to commit to long—term investment plans.
Best UK shares to watch
Considering these issues, here are five shares we think could be the best UK stocks to buy now. These dividend, growth or value shares have been selected from recent market news. Always do your own research. Past performance is not a guide to future performance.
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Top dividend stocks
M&G (LON: MNG)
In its H1 results, savings and investment company M&G reported a 3.7% increase in assets under administration reaching £346bn, up from £333bn the year before. Underlying operating profit dropped 4% but remained higher than market expectations.
Looking ahead, M&G are looking to grow its Asset Management and Wealth side of the business so that it accounts for 50% of the business (it currently accounts for 42%). The company is also looking to phase out its annuity portfolio and legacy products.
In October this year, M&G paid out a dividend of 6.60p, up from 6.50p the year before. The company have a cover ratio of 3.8 which suggests that its well placed to continue its strong dividend payments into 2025.
Our analysts have given the stock a buy rating with an average price target of 226p in the next 12—month period, up 13.32% from its current value.
Dividend yield: 13%
Dividend cover ratio: 3.8
Phoenix Group (LON: PHNX)
Savings and retirement company Phoenix Group reported strong H1 results for the 6 months ending 30 June 2024. Operating profits increased by 15% year— on— year to £360 million, driven by growth in Savings, Pensions and Retirement solutions. Cash generation also increased, reaching £950 million, and the company is expected to meet the upper end of its £1.4— 1.5 billion target for 2024.
In its H1 results, savings and retirement company Phoenix Group reported impressive results. Operating profits reached £360 million, up 15% year—on—year.
On 31 October this year Phoenix Group paid a dividend of 26.65p, up from 26.00p the year before. With a cover ratio of 4.6 the company appears well positioned to offer strong dividend payments into 2025.
Phoenix Group paid a dividend of 26.65p on 31 October this year, up from 26p year—on—year. The company has a cover ratio of 4.6 indicating that its well positioned to continue strong dividend payments into next year.
Dividend yield: 10.2%
Dividend cover ratio: 4.6
Top growth stocks
Tristel (LON: TSTL)
Tristel produces disinfectant foams and wipes for medical purposes. The company reported strong FY24 results with revenue increasing by 16% to £41.9 million and pre—tax profits were up 38.5% which was largely driven by solid cash generation and strong sales of its chlorine dioxide—based infection prevention products.
Tristel’s ROE stands at 20.57%, up almost 6% year—on—year and its EPS growth forecast stands at 25% indicating the stock has growth potential.
Our analysts have given the stock a buy position with a potential upside of 11.63% in the next 12—month period.
Energean (LON: ENOG)
Exploration and production company Energean reported strong H1 results with revenue reaching $867 million, up 47% year—on—year. EBUTDAX increased by 65% and profit after tax reached $89 million, up 27%.
Increased demand, particularly from Israel has resulted in a 38% increase in production to 146,000 million barrels a day.
Energean’s ROE is up 25.25% from the previous year to just over 27% and its EPS growth forecast stands at 28% suggesting the stock has growth potential.
Our analysts have given the stock a buy position with a potential upside of 30.77% in the next 12—month period.
Top value stocks
Card Factory
Retail company Card Factory reported mixed H1 results with revenue increasing by 6% year—on—year to £233.8 million and online sales increasing by 9%. However, a rise in the living wage resulted in a 40% decrease in operating profit. Despite this, the company remain on track to deliver its full year guidance whilst seeing continued sales growth in a difficult economic environment.
Card Factory has a P/E ratio of 7.21, which is below the industry average of 14.37. Its P/B ratio is 1.1. These fundamentals indicate that the stock is undervalued relative to its assets and its stock price could increase in the coming months.
Our analysts have given the stock a strong buy rating with an average predicted upside of 32.70% over the next 12—month period.
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Top shares to watch summed up
The above five companies are just a small selection of top stocks to watch. Remember that any company can also fail and always do your own research.
Trade and invest in over 17,000 UK, US and global shares from zero commission with us, the UK’s No.1 trading provider.* Learn more about trading or investing in shares with us, or open an account to get started today.
*Based on revenue excluding FX (published financial statements, October 2021).
This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
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