While there is more uncertainty for the economy and markets on the cards for 2025, Barclays' analysts still highlight a number of stocks in which they see value in owning next year.
At the same time, they added that this outlook "largely depends on how Trumponomics materialise".
Policies that were proposed by Trump on the campaign trail have fuelled fears that this could reginite inflationary pressures. One key of concern is Trump's proposals on trade tariffs, with the president-elect having floated the idea of a 10% levy on all imports and 60% on those from China.
Markets rallied following the election of Donald Trump earlier in the month, with the S&P 500 (^GSPC) briefly crossing the 6,000-points mark.
On Tuesday, the S&P had dipped 0.4% to 5,870, though it is still up 23% year-to-date. The tech-focused Nasdaq Composite (^IXIC) was also trading slightly lower had a muted start to the week, but has still notched a 25% gain so far this year.
Barclays' team said that "global equities may struggle to deliver outsized risk-adjusted returns again in 2025", though they still looked favourable compared with bonds, cash and credit investments.
Irrespective of this backdrop, the bank's European equity research team highlighted a number of stocks which had been given an overweight-rating and in which analysts had high convinction going into 2025, in a new note released on Monday. They said that these stocks also had a potential upside of 25% on average.
Here's which companies Barclays' team selected.
Oil major Shell was the stock with highest potential share price upside for the year ahead, according to Barclays' team, with them predicting it could potentially rise by as much as 42%.
Lydia Rainforth, managing director for energy and energy transition equity research at Barclays, said: "Shell is a compelling stock to consider for 2025 due to its strong operational momentum, robust cash flow generation, and attractive shareholder returns."
She said that Shell is on track to deliver 500 thousand barrels of oil equivalent per day – known as kboe/d – by 2025 which is the oil major's measure of production.
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Rainforth said this comes alongside its significant cost saving measures, with this operational performance "expected to contribute to robust cash flow generation".
She said that Barclays expected free cash flow to be around $23bn (£18bn) in 2025, "leaving plenty of room to pay dividends and buybacks".
Barclays' team believed that Shell's shares remained undervalued and that in 2025, with a dividend yield of 4.5%, the company is forecasted to deliver a total cash return of 10% at $70 a barrel.
Despite recently posting a slight fall in profits in the third quarter to $6bn, this still came in strongly ahead of expectations, with Shell announcing a further $3.5bn in share buybacks.
Next up on Barclays' list is BE Semiconductor Industries, also known as Besi, a Dutch company which is essentially a chipmaking parts supplier.
Simon Coles, head of European technology headware and semiconductor research at Barclays, said that the company is "poised to benefit from a continued industry-wide expansion into advanced packaging".
He added: "Advanced packaging offers an avenue for chipmakers to increase power efficiency and performance of high-performance compute applications, whether through the adoption of chiplets in advanced-logic processors, or in high-bandwidth memory (HBM)."
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Coles explained that Besi already has a dominant market position in "hybrid bonding" and has the potential to expand into thermal compression bond, which are two of the most advanced versions of advanced packaging.
While recently released results showed that Besi's new orders had missed estimates in the third quarter, the company said it expected a jump in demand for its hybrid bonding systems in 2025 following recent shipment delays.
The company has generated is down nearly 19% year-to-date but Barclays' team believe it could generate an upside of 36%.
Barclays' team also believe that shares in drugmaker AstraZeneca have a 36% potential upside in the year ahead.
Emily Field, head of European pharmaceuticals equity research at Barclays, said that since CEO Pascal Soriot took the helm a decade ago, "AstraZeneca has transformed from a largely primary care focused mid-tier pharmaceutical company into a global R&D-driven powerhouse, now selling some of the largest oncology drugs on the planet."
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"We think now is a compelling entry point in AstraZeneca, as 2025 looks set to be a year of ground- breaking catalysts," she said.
Field said that AstraZeneca has a proven track record of success in research and development, with key results from major trials due out in the second half of 2025.
In terms of its financial performance, Field highlighted that AstraZeneca had raised its guidance twice in 2024 and said that it expected high-teens percentage growth in its earnings per share.
British Airways-owner International Airlines Group is also on the list, partly due to the fact that it benefits from significant exposure to the US economy, as well as to Latin America.
Andrew Lobbenberg, head of European transport equity research at Barclays, said: "Both markets are relatively consolidated, BA and [Spanish airline] Iberia have strong market positions, well located hubs and good exposure to the vibrant post-pandemic premium leisure market."
He said that IAG's profit growth in 2025 should come from the recovery in British Airways, "whose product offering, operational integrity and technology platform are all being renewed".
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Shares in IAG are up nearly 53% year-to-date, with a profit beat in its latest results helping drive the stock higher.
Profit before tax rose to €1.4bn (£1.2bn) in the third quarter, up 17% from the same period last year. IAG said that its North Atlantic region continued to be a "major area of strength" for the company, with unit revenue at British Airways being particularly strong.
Barclays' team believed that there could be a potential 34% upside on its share price over the next year.
Mining giant Anglo American was another stock highlighted by Barclays' experts, with them seeing a potential 34% upside on the share price in 2025.
Barclays' mining equity specialists Amos Fletcher and Ian Rossouw said that the company should continue to benefit from its significant exposure in copper.
They said that the recovery in Anglo American's copper production should coincide with tightening balance of supply and demand in this market.
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Fletcher and Rossouw pointed out that in the energy transition, copper is a "key enabler of low-GHG (greenhouse gas) emission energy sources such as wind, solar and hydro, as well as EVs, renewable power generation and batteries".
They said the company should also benefit from rising merger and acquisition activity in the space. Australian miner BHP (BHP.L) had made three bids for Anglo American but was rebuffed each time, with a six-month restriction period put on any further approaches in May which will soon come to an end.
Fletcher and Rossouw said that they believed investors would "likely continue to judge the success of AAL's management strategy against the implied value of BHP's last non-binding offer ratio".
Shares in Anglo American are up nearly 18% year-to-date.
Despite a challenging year for precision measurement instruments maker Spectris, which is listed on the UK's FTSE 250 (^FTMC) index, Barclays' team have an overweight rating on the stock.
Spectris said in a recent third quarter trading update that headwinds, including continued softness in China, pharma and academia, had persisted in and were likely to continue into 2025.
The company's CEO Andrew Heath said that against this backdrop the company had "increased and accelerated cost reduction activities to improve the Group’s productivity and drive profitability".
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And while Barclays' analyst Jonathan Hurn said the headwinds to the company's earnings had led the team to lower its earnings forecast for Spectris, they viewed 2024 as the "trough".
"We see scope for organic profit growth in FY25, as key end markets recover, including semiconductors and life sciences (H2 weighted), while the US accounts for 40% of group revenue," he said.
Spectris shares are down nearly 33% year-to-date, though Barclays believe the stock has a potential upside of 34% in next year.
Another perhaps more recognisable name on the list is British bank NatWest, which Barclays' Aman Rakkar and Grace Dargan said was one of the team's preferred names in the sector in Europe.
They said that NatWest had "sector-leading" earnings per share momentum and that was expected to see a structural re-rating driven by the UK government's impending exit from its stake in the bank, as well as the UK's improving macro prospects.
NatWest said last week that it bought back £1bn of its shares from the government, meaning the Treasury's stake in the bank would fall to around 11.4% from 14.2%.
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Following bailouts in the financial crisis, the government at one point had an 84% stake in the bank, which was previously known as the Royal Bank of Scotland.
"Additionally, the bank is out of scope of the FCA's motor finance review, a regulatory/legal issue which is weighing on the valuation of other UK banks," they added.
In its recently released results, NatWest posted a 25% increase in profits in the third quarter to £1.67bn ($2.11bn).
Shares in the bank are up 77% so far this year and Barclays' team believes the stock has a potential 18% upside in the next year.
Other stocks that Barclays included in its list include:
SBM Offshore (SBMO.AS)
Unibail (URW.PA)
Schneider Electric (SU.PA)
Ferrari (RACE.MI)
Saint Gobain (COD.L)
Hermes International (RMS.PA)
Zurich (ZURN.SW)
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