Are these the best cheap shares to watch in 2025?

Despite having a strong start to the year with GDP rising by 0.7% in the first three months, it has since slowed with uncertainties surrounding trade tariffs likely to impact future growth. Although further growth is expected, the IMF has lowered forecasts for 2025 from 1.4% to 1.3%.¹

Although the UK economy has entered into a phase of interest rate cuts, inflation remains high and if inflation continues to rise, further rate cuts may be few and far between. At its most recent meeting on 19 June, the BOE decided to hold interest rates at 4.25%. This comes after inflation rose to 3.4%, which is above the BOE’s target figure of 2%.

Given these investment themes, here are five cheap shares we think may be worth keeping an eye on this Summer.

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Best cheap shares to watch

These cheap stocks have been selected as their P/E ratio is lower than the average P/E ratio of its sector as a whole. Always do your own research. Past performance is not a guide to future performance.

1. Barclays
2. Card Factory
3. JD Sports
4. Centrica
5. B&M

Barclays (LON:BARC)

Despite rising in value by almost 70% since the start of the year, shares in Barclays are currently trading on a P/E ratio of around 8.0, below the P/E ratio of the UK finance sector which currently stands at 9.1, indicating that the stock may still be undervalued.

The bank reported strong Q1 results with profits before tax increasing by 19% to £2.7 billion and total income rising by 11%. This was driven by a positive performance across all divisions, within the UK and its Investment Bank showing robust growth.

Chief executive CS Venkatakrishnan recently announced a new plan to revitalise the business, which includes removing £2 billion from the cost base by 2026. He also revealed that the bank plans to return £10 billion to investors in share buybacks and dividends between 2024 and 2026.

Despite uncertainties surrounding the impact of US tariffs, in 2025, the economic landscape looks hopeful with the mortgage market beginning to strengthen and fewer people switching to higher—interest savings accounts.

Our analysts view the stock in a strong buy position where shares could reach 363p in the next 12—month period, up 11% from its current price.

Card Factory (LON: CARD)

Retail company Card Factory saw revenue reach £542.5 million in FY25, up 6.2% year—on—year, outperforming the wider celebration market. Its profit before tax increased by a similar amount. This strong performance was largely due to the increase in new stores and the expansion of its gift and celebration offerings.

Card Factory has a P/E ratio of 6.7, which is below the industry average of 10.6. Its P/B ratio is 0.9. These fundamentals suggest that Card Factory shares could be undervalued relative to its assets, and its share price may increase in the months to come.

Looking ahead, the company expects a stable FY26 with continued sales growth and revenues increasing by a mid—to—high single digit percentage.

Our analysts have given the stock a strong buy rating with an average predicted upside of 73% over the next 12—month period.

JD Sports (LON:JD)

The sports retailer JD Sports reported stable FY25 results with sales increasing by 5.8% and all regions outside of the UK seeing growth.

The company’s acquisition of the US—based company Hibbet has significantly increased its store count and helped it expand into America, which is now its largest market in terms of sales. Although this could offer growth potential, tariffs from the US could cause challenges as a significant number of its products come from Asia.

Whilst most analysts believe its share price reflects the overall economic climate, if conditions improve, it could increase in value. Its P/E ratio of 7.4 is below the P/E ratio of the industry median which currently stands at 10.6, further indicating growth potential.

Our analysts have given the stock a buy rating with an average price target of 114p, up 52% from its current price.

Centrica (LON: CNA)

British energy company Centrica has seen a slow start to the year largely due to the above average temperatures during Q2. Despite this, customer numbers and satisfaction are improving, and Centrica remains on track to meet its full year profit targets.

The company is also shifting to renewable energy sources. Although this requires significant investment upfront, it’s likely to prove beneficial in the long term.

Centrica currently has a P/E ratio of 6.1, which is significantly below the average P/E ratio of the UK energy sector which stands at 10.6. This indicates that the stock may be undervalued and has growth potential.

Our analysts view the stock in a strong buy position with an average price target of 174p, up almost 5% from its current value.

B&M (LON: BMEB)

B&M delivered mixed FY25 results with revenues rising by 3.7% and profits remaining flat due to challenging market conditions. Although revenues from LFL stores were negative, its 70 new stores that opened across the UK, France and Heron performed well and helped generate revenue growth.

Over the next year, the company aims to address its negative LFL revenue and build an extra 45 new stores which could increase growth potential. With a P/E ratio of 8.3, which is below the industry average of 10.6 the company may be undervalued.

Our analysts view the stock in a buy position and anticipate that it could increase by as much as 55% over the next year.

How to invest or trade in cheap shares with us

1. Learn more about cheap shares
2. Choose whether to trade or invest
3. Open an account with us or practise on a demo
4. Select your opportunity
5. Choose your position size and manage your risk
6. Place your deal and monitor your trade

When you invest in cheap shares, you hold them over several years with the view of building wealth over time.

Trading takes more of a short—term approach and takes advantage of small market movements. When you trade you can also benefit from leverage.

Leverage provides you with greater exposure to financial markets than your initial deposit would otherwise allow as market movements are magnified. For example, with 5:1 leverage, you could open a £5,000 position while only depositing £1,000 as ‘margin’. A 10% market movement could result in a 50% gain or loss on your deposited margin.

Keep in mind, leverage means you can gain or lose money faster than expected. Because your position size is far greater than your deposit, you could lose more money than you put in. Be aware also that past performance is not an indicator of future returns.

Best cheap shares to watch summed up

Given the current economic climate, with the UK economy entering into a phase where interest rate cuts are more likely, the above stocks have been identified as having growth potential.²

These companies are just a small selection of top cheap stocks to buy in 2025. Remember that any company can also fail and always do your own research.

Trade and invest in over 17,000 UK, US and global shares from zero commission with us, the UK’s No.1 trading provider. * Learn more about trading or investing in shares with us, or open an account to get started today.

*Based on revenue excluding FX (published financial statements, October 2021).

Footnotes:

¹ IMF, 2025

² Please note growth is never guaranteed. There’s always the risk it could drop in value and you could lose money.