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While others FTSE 100 stocks that have grabbed many headlines in recent years, The next one (LSE: NXT) shares have quietly but confidently rallied in value. This positive momentum continued with aplomb in 2025 following today’s (7 January) latest update from the retail bellwether.
Suggested profit guidance
Trading in the all-important Christmas season had a reassuring force. Total sales rose 6% in the nine weeks to 28 December. That was better than expected.
In response, Next raised its FY25 profit forecast to £1.01bn. Of course, this is only a slight improvement on the previous estimate of £1.005bn. But I think that’s no small achievement when you consider that the UK economy is by no means in poor health. Furthermore, it is slightly higher than the £918m made in FY24.
Looking ahead, Next said it expects total sales growth of 3.5% in FY26 (starting February). Pre-tax profit is expected to rise by almost the same amount to £1.05bn.
Not surprisingly, the market was excited by the news. And considering that shares have already more than doubled in just a few years, I now wonder if this might be the best stock investors can consider buying.
What can stop stocks?
The answer is probably no, as ‘best’ depends and is highly dependent on individual investor strategies. And the following stocks are risk free.
Regardless of how well the company has done over the years, sales in general look set to remain difficult for the foreseeable future. The British Retail Consortium revealed today that UK sales growth between October and December came in at just 0.4%. And this before inflation has been taken into account.
Speaking of which, I think a lot depends on where inflation goes in 2025. Signs that inflation is temporary may boost consumer confidence. But the higher than expected elevation will not go down well.
Let’s not forget that businessmen are also expected to pay more National Insurance for their employees from April.
How much of an impact this will have on Next’s sensitivity is open to debate. Its balance sheet looks strong and the £12bn-cap business has long posted the highest margins compared to peers. On paper, it has many of the hallmarks of a high-end business. But history has shown that its price can fluctuate when the selling point becomes bloody.
Good value still
All that said, we are long-term investors in Fool. We are more concerned when the values exceed more than one year.
For this reason, I think the following stocks still deserve attention and should be considered, even if there are other FTSE 100 stocks that I really like. Under the proven leadership of the longest-serving CEO in the index (King Simon Wolfson), I think the company will once again prove itself as one of the strongest in the industry.
The shares don’t look too expensive either, changing hands as they do at a price-to-earnings (P/E) ratio of 14. That’s slightly higher than Next’s five-year average of 12.
While they may be wide on the mark, analysts have a 2.6% dividend yield. So at least the owners will get compensation if the positive momentum seen in the last few years is temporarily lost.
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