6 UK Stocks I'm Buying January 2025

Summary

In this video, the investor shares their stock-buying strategy for January 2025, focusing on undervalued companies with strong dividend yields and growth potential. Key stocks discussed include Boohoo, B&M, The Money Group, and Watch the Switzerland Group. The investor highlights a focus on patient investing, with particular attention to companies that can weather economic challenges and offer reliable returns. While concerns about certain market conditions are acknowledged, there’s confidence in the long-term potential of these investments, particularly with the prospects of dividends and strategic expansions.

Takeaways

• 😀 The individual has been buying stocks in companies with undervalued valuations due to concerns about inflation and rising costs.
• 😀 They see potential for B&M to outperform in an economic downturn, as consumers may turn to budget retailers during tough times.
• 😀 B&M is currently trading at a cheap valuation (11 times earnings) and has the potential for growth by expanding into France and increasing its store count from 764 to 1,200.
• 😀 The individual remains confident in B&M's future performance despite the negative economic backdrop, especially given its social media following and loyal customer base.
• 😀 Money Group has been facing challenges with inflation and high interest rates, but its valuation is low, making it an attractive hold despite the absence of near-term catalysts.
• 😀 The individual initially expected interest rates to drop in 2025, which would benefit Money Group, but now believes this may be delayed until 2026.
• 😀 Money Group's profitability remains strong, with a solid balance sheet and the possibility of a good return, even if short-term growth is slower than expected.
• 😀 The individual sold their position in Watches of Switzerland for a 60% return, citing concerns that the stock had risen too much without a corresponding improvement in financial performance.
• 😀 The decision to sell Watches of Switzerland was driven by the stock reaching high valuations, and the individual felt it was prudent to lock in profits.
• 😀 Despite challenges in the market, the individual has been making positive returns and is optimistic about the potential for future gains from their remaining holdings.
• 😀 The individual emphasizes patience and confidence in their investments, particularly with dividend-paying stocks, while acknowledging that some stocks may be slower to recover in the short term.

Q & A

What is the speaker's general investment strategy for 2025?

The speaker's investment strategy for 2025 focuses on stocks that are undervalued or temporarily hurt by economic factors, such as rising minimum wages and national insurance costs. They aim to invest in companies with strong management, good financials, and long-term growth potential.

Which stock does the speaker think could see a 50-100% price increase by 2027?

The speaker believes a specific stock (not named in the transcript) could see a 50-100% price increase by 2027, citing the company's solid management, healthy cash balance, no debt, and the potential for growing revenue and profitability.

What is the speaker's view on B&M's potential during an economic slowdown?

The speaker believes B&M, as a discount retailer, is well-positioned to perform well during an economic slowdown. As consumers become more price-conscious, they expect people to flock to bargain retailers like B&M, which could boost its sales even in challenging economic conditions.

How does the speaker feel about B&M’s current stock valuation?

The speaker considers B&M's stock undervalued, as it is trading at 11 times earnings, which is historically cheap for the company (usually around 18-20 times earnings). They also see the potential for the company’s expansion in France and plans to open more stores, which could lead to revenue and profitability doubling.

What differentiates B&M from Tesco in terms of profit margins?

B&M has significantly higher profit margins compared to Tesco. While B&M’s profit margins are around 5-6%, Tesco’s margins are much lower, at about 1-2%. This makes B&M a more profitable business in comparison.

What was the speaker’s initial expectation for MoneySuperMarket (Money Group) and how has that changed?

The speaker initially expected that lowering interest rates and a better economy would help MoneySuperMarket’s comparison services grow, especially for big-ticket items like mortgages and loans. However, due to high inflation and the government's pay increases, interest rates are not expected to decrease anytime soon, which has delayed the anticipated growth.

What is the current valuation of MoneySuperMarket and why does the speaker find it attractive?

MoneySuperMarket is currently trading at 13 times earnings, which the speaker finds attractive given that it previously traded at 18-19 times earnings. Despite the delays in expected catalysts, the stock offers a solid 6% dividend yield, which makes it a decent investment at its current low valuation.

Why did the speaker decide to sell their position in Watches of Switzerland?

The speaker decided to sell their position in Watches of Switzerland after achieving a 60% return. They believed the stock had appreciated too much in value, outpacing its financial performance, and felt the risk-to-reward ratio was no longer favorable. Therefore, they decided to lock in their profits.

What is the speaker's outlook for the MoneySuperMarket stock in the next few years?

While the speaker is more cautious about MoneySuperMarket in the short term, they believe the stock could perform well in the longer run, particularly when the expected catalysts (such as lower interest rates) materialize in 2026. They plan to be patient and hold the stock for the dividend yield in the meantime.

How does the speaker view insider buying activity in some of the stocks mentioned?

The speaker views insider buying activity as a positive sign, particularly when executives like the CEO and chairman purchase shares. This is seen as a signal of confidence in the company's future prospects and financial health.