These FTSE 100 shares proved to be huge disappointments for me last year. But I’m optimistic they could prove excellent holdings in my Stocks and Shares ISA over time.
Here’s why I think their share prices could be set to bounce back imminently and why they’re worth considering now.
Barratt Redrow
2024 proved to be another bumpy year for housebuilders’ shares. The Barratt Redrow (LSE:BTRW) share price, for instance, dropped 21% over the year.
Investors were spooked by signs of more stubborn inflation in the UK. If this persists, the Bank of England may water down plans for interest rate cuts, impacting buyer affordability in the process.
That said, ongoing strength in the UK homes market leads me to think the market may be too bearish on the builder. Latest data from Nationwide showed average house prices rose for a fourth successive month in December. Last month’s annual increase, at 4.7%, was also the best reading for two years.
Planned Stamp Duty changes in March may be contributing to strong demand right now. But other factors like competition among mortgage providers, improving buyer confidence, and rapid population growth are supporting sales, could underpin further strong trading at Barratt Redrow and help its share price rebound.
Latest financials showed the company’s weekly private reservation rate per outlet stood at 0.67 between 22 August to 13 October. That was up almost a third from the corresponding 2023 period.
City analysts are optimistic that Barratt Redrow’s share price will bounce back this year. The 17 brokers with ratings on the stock have assigned a 12-month price target of 572.8p per share to the housebuilder.
That reflects a 30%+ premium from current levels of 439p.
Diageo
Drinks giant Diageo‘s (LSE:DGE) been a victim of poor sales more recently, and especially in Latin America and the Caribbean. This contributed to an 10% share price drop in 2024.
The Guinness and Johnnie Walker producer isn’t the only beverages manufacturer suffering as consumers tighten their belts. It’s a trend that might continue too if stubborn inflation persists, limiting the potential for swingeing central bank rate cuts.
Yet City brokers are quietly confident that Diageo shares will recover ground in 2025. Twenty two analysts currently have ratings on Diageo shares and they’ve slapped a 12-month price tag of £27.25 on the Footsie firm. This represents a 7% premium from current levels of £25.48.
I’m optimistic too that Diageo could enjoy a much better year in 2025. As I type, global interest rates are tipped to continue dropping which should stimulate drinks-related spending. A first-class brand portfolio that includes the likes of Guinness and Johnnie Walker puts the company on a sound footing to exploit a market recovery too.
Diageo’s profits (and by extension share price) are also expected to benefit from recent shake-ups to its route-to-market channels in the US, heavy restructuring in Nigeria, and its steady gravitation to fast-growing segments like premium and non-alcoholic drinks.
Today, the FTSE business trades on an historically low price-to-earnings (P/E) ratio of 18.5 times. This provides additional scope for a share price rebound this year.
