The FTSE100 has had a fantastic run over the past nine months. Since October 2023, the index has risen by double digits. In recent weeks, performance has slowed somewhat. However, analyst forecasts for 2025 suggest there is still plenty of room for growth. In fact, the FTSE 100 could cross the 10,000 mark for the first time in April next year!
FTSE 100 analyst forecasts for 2025
With inflation now largely under control, investors are eagerly awaiting the Bank of England’s announcement of its first round of interest rate cuts. This month, the general consensus is that rates will fall to around 3.5% by this time next year.
This is great news for businesses and mortgage holders. After all, lower interest rates mean cheaper debt, which frees up capital for growth and consumption. So it’s no wonder that forecasts for 2025 are optimistic.
Based on the latest data from the Economy Forecast Agency, the UK benchmark index has the potential to reach 10,044 points by April. Compared to today, that represents a potential gain of 22.3%, which would be exceptional. Remember, the FTSE 100 has historically typically returned just 8% per year.
As exciting as this prospect is, it is important to note that this is the best-case scenario forecast. Analysts’ forecasting models are notoriously unreliable as they are often based on unrealistic assumptions. Consequently, the same forecast also shows that the index could potentially rise to only 8,730 points, or 6.3%.
This still signals an upward trend, but it is nowhere near as steep. And if it takes longer than expected for interest rate cuts to occur, the index could fall short of even the most pessimistic expectations.
Nevertheless, I remain cautiously optimistic for 2025. That’s why I’m currently hunting for bargains before the market starts to climb.
A great buying opportunity?
Of all the FTSE 100 companies to choose from, B&M European Value Retail (LSE:BME) has my attention right now. The discounter currently has some of the highest profit margins in the industry and challenges titans like Tesco to shame. And as the cost of living crisis forces consumers to save money, the retailer continues to grow its sales and profits by 10%, according to its latest report.
Despite the progress, however, the share price is on a downward trend, falling by almost 20% in June. The trigger for this decline appears to be a reduction in forecasts by Morgan Stanley who set their price target at 433 pence last month. Barclays also recently lowered their target from 625 pence to 615 pence.
Aside from the wide price range, there seems to be a growing consensus that the coming quarterly results will fall short of expectations. And this pessimistic outlook is perhaps justified when you consider that the group achieved some pretty difficult comparative figures a year ago.
However, I personally think the recent sell-off has been a bit overdone. Even if B&M falls short of expectations, management’s long-term strategy seems to be on track. And with economic conditions expected to improve through 2025, I see a buying opportunity, so I plan to buy some shares once I have more capital available.
The post FTSE 100 soars to 10,000! 1 cheap stock I’d buy before it surges appeared first on The Motley Fool UK.
Further reading
Zaven Boyrazian does not own any of the stocks mentioned. The Motley Fool UK has recommended B&M European Value, Barclays Plc and Tesco Plc. The views expressed on companies mentioned in this article are those of the author and may therefore differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool, we believe that considering a diverse range of insights makes us better investors.
Motley Fool UK 2024
