The UK’s FTSE 100 index has risen in recent years. Last year, it hit an all-time high of 8,475. Could the index hit 10,000 in 2025? Let’s discuss.
A 22% gain’s needed from here
As I write this, the FTSE 100 stands at 8,222. So to hit 10,000 in 2025, it would have to rise by about 22%.
That kind of rise isn’t unheard of for a major stock index. The S&P 500, for example, eclipsed that return in both 2023 and 2024 with gains of 24% and 23%. But it’s pretty rare for the FTSE 100 to deliver that magnitude of gain. Looking at its historical performance, the last time it achieved that kind of return was in 2009.
Could it happen?
Personally, I don’t think it’s capable of rising 22% this year. One reason I say this is that last time it delivered this kind of return, stocks had just crashed during the Global Financial Crisis (GFC). So that was a recovery year.
In other words, it was a very different set-up to today. Back in early 2009, many stocks were at rock-bottom levels.
Another is the make up of the index itself. Currently, the top 10 holdings (which account for around 45% of the index) are AstraZeneca, Shell, HSBC, Unilever, Rio Tinto, RELX, BP, British American Tobacco, London Stock Exchange Group, and Diageo. There are some great companies in that list. But I can’t see this group, as a whole, generating prolific returns in 2025.
Bigger gains from individual stocks?
I do think there are a lot of individual FTSE 100 stocks that could rise more than 22% this year though. One example is Ashtead (LSE: AHT) which rents out construction equipment on both sides of the Atlantic.
This stock’s had a big pullback recently. Over the last month or so, it’s fallen from £64 to £50 on the back of lower guidance for the financial year ending 30 April (FY2025).
I wouldn’t be surprised to see it get back to £64 by the end of the 2025 though (Goldman Sachs has a price target of £66). That would equate to a gain of 28%.
One reason I’m bullish here is that Ashtead currently generates the bulk of its revenues in the US. And with Donald Trump in the White House, the US is likely to see a lot of construction activity in the years ahead as he aims to ‘make America great again’.
If it’s looking like FY2026’s going to be a strong year for the company, the share price could move significantly higher. Currently, the price-to-earnings (P/E) ratio using the earnings per share forecast for FY2026’s only 14.6. So there’s room for a re-rating.
Of course, there are no guarantees this stock will rise 22% or more this year. One risk is interest rates. If they stay higher for longer, this stock may go nowhere (or even fall) because the company has a chunk of debt on its balance sheet.
I’m an investor here however, and I remain optimistic about the stock’s prospects given the backdrop in the US. And at current levels, I think the stock’s worth considering.
This post was originally published on Motley Fool
