5 stocks to watch in early 2025

Keen readers of companies’ financial reports can take a break in the new year: very few London-listed businesses report in January, although they start to come thick and fast in February. 

Early January will, however, see a flurry of trading statements from retailers covering the vital Christmas period. Such statements normally report sales trends but not profits. They are brief summaries rather than the full financial reports that appear at the six-month interim stage of a company’s financial year and at the year end.

You can find Christmas trading statements, along with all company updates, at the relevant page of the London Stock Exchange’s website – scroll down to the ‘News’ section. For example, updates from Tesco appear here. Recent announcements are also available on the relevant page of Fidelity’s website, such as Tesco’s here. 

Here we list some of the detailed financial reports from large companies scheduled for the first couple of months of the new year. 

This article is not a recommendation to buy or sell these investments; it is purely insight into some of the companies that announce results in the coming months. 

Shell 

Fourth-quarter update 30 Jan 2025 

When we previewed Shell’s third-quarter update in October we said the subdued crude oil price of the time, about $74 a barrel, would put oil companies’ finances under pressure and cause them to cut spending or borrow more if they wanted to maintain earlier levels of share repurchases, although there appeared to be no threat to the dividend. At the time of writing the present article the price of crude oil is $74.30 so those pressures are unlikely to have eased. 

Shell may be doing a better job than rivals at navigating this unpromising background, however. Analysts at Berenberg, the bank, wrote in November, after the third-quarter update, that Shell ‘continues to differentiate itself against peers in Europe, posting another strong beat [surpassing of earnings expectations] … and maintaining buybacks stable at a high level while strengthening the balance sheet further’, with ‘cost control and capital discipline shining through’. The bank said Shell’s financial strength gave it flexibility and options, ‘both in terms of shareholder returns and any opportunities to be counter-cyclical should interesting opportunities arise’. 

Berenberg said that, despite strong outperformance of rivals, Shell’s valuation remained attractive at 8.9 times forecast earnings for 2025 and at a free cash flow yield of 12%. The bank forecast an increase of about 7% in the fourth-quarter dividend for a predicted yield of 4.4%. Please note this is not guaranteed.  

More on Shell 

Diageo 

Interim results 4 Feb 2025

Diageo, the spirits company behind brands such as Johnnie Walker and Guinness, has had a torrid couple of years – the shares at £25.14 are 39% lower than their record high of £41.04 reached at the beginning of 2022. A severe profits warning in October 2023 led to the sharpest share price fall since 1997 and the shares have continued to fall since then, despite some recovery in December. The company had been seen as a long-term beneficiary of the ‘premiumisation’ trend – consumers trading up to pricier drinks – but the bout of severe inflation after the Russian invasion of Ukraine put that process on hold, with a consequent hit to Diageo’s profits. Some analysts have even wondered whether the premiumisation trend may have come to a halt and not just taken a pause for breath. 

‘The market debate is that lack of growth is structural; our view is that it is cyclical and 2025 represents the trough,’ wrote analysts at Jefferies, the investment bank, in early December. Sentiment on spirits had been ‘severely dented’ by an acute cycle of downgrades to earning expectations, the bank said; ‘however, the data is not getting worse and destocking [a reduction in customers’ stock levels, which tends to result in reduced orders] is largely complete’. 

Jefferies also welcomed the arrival of a new chief financial officer, Nik Jhangiani, from Coca-Cola Europacific Partners, a rival company that has enjoyed a spell of great success. ‘Nik Jhangiani has taken over after some difficult years and after a period of considerable internal change [at Diageo]. We think he will bring fresh perspectives on cost discipline, cash and returns, and sharpening execution,’ the bank said. It said the interims could provide a ‘clearing event’ marking the start of a new chapter for the shares as it predicted a recovery in profitability from 2026 onwards.  

More on Diageo 

AstraZeneca 

Fourth-quarter update 6 Feb 2025 

AstraZeneca’s status as Britain’s biggest listed company has not protected it from severe share price volatility over the past year: it enjoyed a very strong rise of 23% over the first eight months of 2024 but has now given up all those gains and is back where it started. Analysts have blamed the reversal on disappointing results from a lung cancer drug and concerns over investigations of employees in China for medical insurance fraud and illegal drug importation. But in research on the company published in mid-November Berenberg said the China impact appeared to be ‘limited’ while the prospects for Astra’s pipeline of drugs in development were ‘largely unchanged’. 

That pipeline includes treatments for breast cancer, lung cancer, hypertension and asthma, while the first data from phase 2 clinical trials of Astra’s obesity drug, a ‘GLP-1’ that could rival the likes of Wegovy from Novo Nordisk and Eli Lilly’s Zepbound, could be published over the next year. Berenberg said its analysis of the returns Astra makes on its research and development spending indicated ‘superior pipeline returns, ahead of the cost of capital and the sector average’. It added: ‘AstraZeneca is set to deliver industry-leading sales and EPS [earnings per share] growth from its innovative, rejuvenated portfolio. As profitability improves, so does the cash position. With the dividend covered, management has more cash at its disposal to invest in R&D.’ The bank also expects debts to fall sharply from £21.7bn at the end of the 2023 financial year to £9.8bn in 2026.  

More on AstraZeneca 

Unilever 

Full-year results 13 Feb 2025 

There is a lot for investors in Unilever, the consumer goods giant, to keep up with at the moment. Its new boss, Hein Schumacher, who has announced plans to spin off its ice cream division into a separately listed business, has said he wants to slim down but keep the food division and outlined plans to ‘double down’ on the Indian market. Mr Schumacher, who took over as chief executive in July 2023, has also begun a cost-cutting drive that involves hefty job losses – and he has even ditched the company’s previous slogan, ‘To make sustainable living commonplace’, and replaced it with the wish to ‘Brighten everyday life for all’, a move likely to please investors such as Terry Smith of Fundsmith who took issue with what they saw as Unilever’s excessive embrace of non-financial goals. 

One thing we don’t yet know is where shares in the standalone ice cream business will be listed. Although it’s possible that we’ll hear more about it with the annual results, Mr Schumacher has only said he will announce details of the listing in the first half of the year. There is much debate in the financial markets at present about the best place to list companies – several have chosen New York over London in recent months and there is a perception that Wall Street offers higher valuations than the City. Mr Schumacher has also said he is ‘open to offers’ if someone wants to buy the ice cream arm instead. 

As an international company, Unilever also has to contend with geopolitical and economic trends beyond its control. It makes about 57% of its sales in the emerging markets, which some analysts think could be especially vulnerable if the policies of the second Donald Trump administration result in a strong dollar, which could increase emerging nations’ borrowing costs. 

After reassuring figures in a third-quarter update in October, investors will be expecting organic sales growth of 3%-5% and underlying operating profit margins of at least 18%. In an announcement to the City in November the company said it aimed to make an underlying return on invested capital in the high teens, ahead of its previous ambition of the mid-teens, and to sustain an average cash conversion ratio of around 100% over time. Both figures would be pleasing to ‘quality’ investors such as Mr Smith who regard return on capital and cash conversion as key indicators of a strong business. ‘Value creation will be underpinned by disciplined capital allocation,’ Unilever added. 

More on Unilever 

NatWest 

Full-year results 14 Feb 2025 

City analysts expressed a strikingly positive opinion of NatWest in November 2023 when they called it ‘probably the best hedge in the world’. (Even more striking perhaps is that those analysts were at NatWest’s arch-rival Barclays.) They were referring to the benefits that flow to banks once hedges on interest rates expire and they are able to reap the full rewards of interest rates that are now much higher than before the pandemic. Barclays forecast that the effects of the hedge unwinding could amount to 70% of the bank’s earnings per share. Its analysts reiterated their belief in the power of the hedge unwinding in a note published in November 2024. 

In the same note they pointed to the likely effect of share repurchases on NatWest’s earnings per share (EPS). NatWest is in the unique position of making regular repurchases of its own shares from one shareholder in particular: the government. The latter is using these buybacks as a way to reduce its stake in the bank without all the expense of the kind of ‘Tell Sid’-style retail offer planned by the previous government but abandoned by Labour. Share buybacks tend to increase EPS because they reduce the number of shares among which profits are distributed. Barclays estimated that NatWest’s EPS would rise by 8% in 2025 and by 6% in 2026, figures that it described as ‘meaningfully ahead of the sector average of flat to low single-digit growth’. 

At the current share price of 400p NatWest is trading at 7.6 times Barclays’ estimated earnings for 2025. ‘NatWest remains one of our best ideas in European banks,’ its analysts concluded. 

More on NatWest 

Five-year share price performance table 

Past performance is not a reliable indicator of future returns. 

Source: FE, 31.12.19 to 31.12.24 Basis: Total returns in GBP. Excludes initial charge. 

Important information - investors should note that the views expressed may no longer be current and may have already been acted upon. When you are thinking about investing in shares, it’s generally a good idea to consider holding them alongside other investments in a diversified portfolio of assets. Reference to specific securities should not be construed as a recommendation to buy or sell these securities and is included for the purposes of illustration only. This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to one of Fidelity’s advisers or an authorised financial adviser of your choice.