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You want the best FTSE 100 growth stocks to buy? Here are two that I think could bounce back this year after a rough 2024, and should be considered.
Persimmon
A house builder Persimmon (LSE:PSN) started the New Year on the back foot. But it is gaining momentum thanks to a series of positive data from the housing market.
I think this could continue if the (potential) fall in interest rates ignites strong demand for bonds in the UK.
New analysis today (20 January) from Rightmove confirmed the fundamental strength of the housing market right now. It showed property prices rose 1.7% in January, representing the biggest jump in prices at the start of the year since 2020.
For the full year, Rightmove is predicting a 4% rise in property prices, and an increase in total sales, to 1.15m.
This follows a negative trading review from Persimmon itself last month. Then, the builder said “cuser inquiries and sales levels have been ahead of the previous year since the spring sales season“. It also said pre-sales were up 8% year-on-year, at £1.1bn.
Homebuilders are not completely out of the woods. There is no guarantee that interest rates will drop, which affects the continued availability of homebuyers. Inflation is also a threat to the profitability of these companies.
But on balance, I think Persimmon, for one, is in good shape for a strong recovery from this year onwards. City analysts agree with me, and are suggesting wage growth of 16% in 2025 and 20% in 2026.
I don’t think the FTSE company’s low valuation reflects this positive outlook. Its price-to-earnings growth (PEG) ratio, at 0.8, remains below the benchmark for an undervalued stock. This leaves more room for share price reversals, in my view.
The Ashtead Group
Like Persimmon, Ashtead (LSE:AHT) is very sensitive to interest rates and their impact on property markets. In fact, the impact was worse than expected, with the business publishing another profit warning in December.
At the time it lowered its full-year growth target, to between 3% and 5%, from 5%-8% previously.
The rental equipment supplier is also facing uncertainty as US President Trump has played down the idea of new trade tariffs that could cool the domestic economy. Ashtead makes about nine-tenths of its sales from the US.
However, as far as the housebuilder is concerned, I believe things are generally looking up for Ashtead as the central banks react to deflation. That’s why City analysts are suggesting earnings growth of 14% for both financial years up to April 2026 and 2027. A 5% decline is predicted in the current financial period.
There are also significant growth opportunities for the FTSE 100 company to exploit in the coming years. One of these is a large jump in the number of so-called major infrastructure projects planned for the next few years.
Ashtead puts the total value of these at $974bn between 2025 and 2027. That’s up significantly from $509bn between 2022 and 2024.
With its ambitious expansion strategy, Ashtead is positioning itself to take advantage of this upturn, as well as the eventual recovery in the construction market. I expect its share price to rise strongly over the next few years.
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