Christmas is a time for secret Santas – a time when office colleagues buy each other presents for under a fiver or re-give last year’s gift to someone else and hope no one notices.

Working for a fund manager, I sometimes think it might be more enjoyable to give each other share ideas (imagine the joy of unwrapping Tesco). But it should really be something quirky and a bit surprising – in the true spirit of the game.

I may simply be demonstrating how ‘fun’ I have become after 15 years in the industry and a gruelling few years as a UK equities manager, but I am not going to be waylaid. I still haven’t decided what ideas I would put in a secret Santa stocking, but I do have a shortlist of three stocks I think would fit the bill.

First, some context. As the saying goes, stocks ‘climb a wall of worry’. This year has been a good one in an absolute sense for UK equities, but the overhang of, firstly, the general election and, secondly, the Budget – as well as the subsequent uncertainty around the cost to businesses of additional national insurance – has led to a frustrating year for a lot of active UK managers. Previous assumptions of falling UK interest rates and rising real wages may need to be refreshed with a cold, hard look come the new year.

As this year comes to a close, many fund managers (or maybe just me) are looking forward to a quiet Christmas and crossing their fingers that we don’t get the dreaded unscheduled trading statement between Christmas and New Year.

Increasingly, with the uncertain domestic backdrop – plus the ‘known unknown’ of what Trump’s intentions after taking up office are – I am looking for companies where I can see a route to earnings growth and, ideally, a valuation catalyst, independent of the end-market backdrop here or overseas.

Needless to say, the following do not constitute stock recommendations!

Blue chips and a bit of AIM

DCC (DCC) – a FTSE 100-listed distributor of energy, healthcare and technology products. If you think the description sounds a little conglomerate-like, you would be right. The company has recently announced its decision to sell its healthcare and technology divisions – the latter with a bit of a lag while it is restructured. If enacted, this will leave the business solely focused on energy, a division that has grown earnings by roughly the mid-teens over time and which is increasingly demonstrating its resilience through the energy transition. The group as a whole trades on a low-teens price-to-earnings multiple – lower than it has historically – and I think it will be easier for investors to get a grip on when it emerges in its new, simplified form.

FRP Advisory (FRP) – an AIM-listed restructuring company. This is traditionally thought of as a counter-cyclical business. In other words, it does better at times of widespread economic distress. But I think it is better thought of as a business that needs a more ‘normal’ cost of capital than we saw in the decade or so after the financial crisis. It recently reported a 23% organic growth rate in sales in the first half of its financial year, which is not to be sniffed at. I see it as a quiet ‘compounder’.

Smith & Nephew (SN) – a blue-chip medical technology business. The mere mention of it might draw a groan, as it has gone through many restructurings in its time, but low expectations tend to be a good place to start. Under a new chief financial officer and a newish chair, Rupert Soames, the company is focusing on areas where it has historically been poor, such as improving cash generation and return on capital. At the same time, its US orthopaedic division is trying to catch up with its peers. Evidence will show whether this has or hasn’t worked as 2025 progresses. If it is the latter, I would expect shareholder pressure – which has already been made public (not from us, I might add) – to increase.

Hopefully, the above goes to show that while there is always ‘noise’ – and there is definitely a lot of it at the moment – there will also always be companies that are quietly getting on with things, growing earnings and paying dividends to shareholders.

There have been a few times in the past year when I have felt demoralised – I would guess I’m not alone in this. But the best antidote is to get on the road and meet companies. My spirits are always revived seeing what is happening on the ground across the country.

The UK is an exciting market. Let’s hope 2025 is the year the rest of the investment world sees what I see when I meet the managers of great British companies.

Laura Foll is co-manager of the Henderson Opportunities Trust (HOT ), Lowland Investment Company (LWI ) and Law Debenture (LDEB ), as well as the Janus Henderson UK Equity Income & Growth fund.

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