Lloyds (LSE: LLOY) shares have performed really well recently. Over the last year, they’ve climbed from 47p to 72p – a gain of 53%.

Looking ahead, the shares could continue to deliver positive returns for investors. However, over the next five years, I think there will be plenty of UK stocks that deliver higher returns.

Strong momentum

Lloyds shares have several things going for them right now (so they could still be worth considering).

For starters, profits are expected to rise in the years ahead. For 2025 and 2026, City analysts are expecting earnings per share of 7.1p and 9.1p, respectively, versus 6.3p for 2024.

Secondly, the dividend is growing. Recently, Lloyds declared total dividends of 3.17p for 2024 – an increase of 15% year on year. That payout translates to a yield of about 4.4% at the current share price. That’s a higher yield than most savings accounts are offering.

Third, the company is buying back its own shares. Recently, the bank announced a £1.7bn buyback (which should help to boost earnings per share).

Finally, the shares are in a strong uptrend. And trends can last for a while.

However, despite all of the above, I’m not convinced that Lloyds shares can deliver big returns over the next five years. The main reason for this is that the bank’s fortunes are closely tied to the strength of the UK economy.

I just don’t see the UK economy firing over the next five years (it could even be quite weak). And I think a lack of economic growth may hold Lloyds shares back.

Outperformance potential

One UK stock that I believe is likely to outperform Lloyds over the next five is Wise (LSE: WISE). It’s a leading financial technology (FinTech) company that specialises in international money transfers.

This company operates globally (70+ countries worldwide) today, so it’s not dependent on the UK economy like Lloyds is. That’s one reason I see outperformance potential here.

Another reason is that Wise is far more scalable than Lloyds. Lloyds’ growth potential is quite limited due to the fact that it’s a UK-focused bank. With Wise, however, the growth potential is essentially limitless. That’s because it’s a global company with the ability to continually roll out new products and services for its customers.

One other factor that could potentially help this stock outperform Lloyds is the global shift away from traditional banking services (like Lloyds offers) towards fintech services such as electronic payments and mobile payments. Given this shift, Wise could potentially even capture market share from Lloyds (its international payments services are very uncompetitive today).

Now, competition from other fintech companies could result in my prediction missing the mark. As could valuation compression (the company’s price-to-earnings (P/E) ratio is about 28 today, which is quite high).

Taking a five-year view, however, I’m quite optimistic about the stock’s prospects. I think this fintech stock is worth considering today.

A few short months ago, I didn’t think I’d be writing a headline like this. But it’s been a terrible week for Tesla (NASDAQ:TSLA) stock, pummelled by falling European sales figures released on Tuesday.

Tesla soared as high as $488 in December on the back of CEO Elon Musk’s association with the then-President elect Donald Trump. Since then, it’s lost more than 40% as Musk’s personal popularity has waned. Tesla’s market capitalisation fell below $1trn for the first time since November.

Losing the EV edge

The pounding continued after Tesla reported a 45% January sales fall across European markets. That’s perhaps not as bad as it sounds though, with electric vehicle (EV) sales down 37% overall.

But with competition hotting up, it looks increasingly like Tesla has lost any first-mover advantage it once had. That’s actually in car sales, at least. Vehicles from Chinese manufacturer BYD are growing in popularity, as they typically offer more features for less money.

But some do seem to be turning away from the brand due to Musk’s political activity. Former Tesla director Peter Bardenfleth-Hansen told the BBC that “he may be getting a bigger fanbase within a specific type of clientele, but they’re not the ones that are buying the Teslas.”

Are the golden days over, and should shareholders cut and run? I think a knee-jerk reaction like that could be a mistake. ‘Father of Value Investing’ Benjamin Graham pointed out that markets follow prevailing sentiment in the short term. But in the long term, they weigh up the actual fundamentals. Might it instead be a good time to buy?

Defining the robot-driven future

The attraction of Tesla for me isn’t in sales of the cars. It’s more about the technology the company’s developing. It starts with battery and charging technology, which has set global standards.

It extends to future developments including fully self-driving vehicles. The robotaxi business has been making the headlines. But imagine a time when driving tests are history and the cars do all the work. AI-driven optimal route planning, no more speeding tickets, maybe even no more road accidents… the day will surely come.

Tesla spent around $5bn on AI reseach in 2024 and has plans for about the same this year. Most ‘Magnificent 7’ AI spend seems to be piling into data centres for running large language models. But Tesla, while also needing AI for data processing, is focused on self-driving and robotic autonomy.

The hard question

Is the stock worth today’s valuation? Forecasts put the price-to-earnings (P/E) ratio up at over 100. I know plenty of techie growth stocks have commanded higher valuations in the past and have gone on to winning ways.

But I’ve no clue where Tesla might be this time next year, never mind in five years’ time. And I think the price could have a fair bit more to fall before it recovers. It’s all enough to keep me away.

But I think growth investors with long-term horizons might be making a mistake if they don’t even consider Tesla right now.

BAE Systems (LSE:BA.) shares have appreciated 16.3% since the start of 2025, driven by talk of rapid Western rearmament. This takes total gains since Russia’s invasion of Ukraine in early 2022 to a whopping 123%.

I’m wondering though, if the FTSE 100 defence giant still looks cheap based on predicted earnings growth.

The GARP (Growth at a Reasonable Price) strategy seeks to find companies that offer the holy grail of growth and value. It aims to help investors achieve capital appreciation without overpaying for the privilege. So does BAE Systems’ share price look cheap despite its recent meaty gains?

PEG ratio

To ascertain a stock’s GARP credentials, I need to divide the forward price-to-earnings (P/E) ratio by expected profits. This gives me the price-to-earnings growth (PEG) multiple. To qualify as a value share, BAE Systems needs to have a reading of 1 or below. Here’s how it scores:

You’ll see that the defence firm falls short from a GARP perspective. Despite predictions of solid earnings growth, an historically high P/E reading drives the PEG ratio up.

Sector comparison

While disappointing, it’s worth remembering that earnings multiples have leapt across the defence sector more recently. So I also want to see how BAE Systems’ shares stack up compared with other industry giants.

Here’s what I’ve discovered, based on expected earnings per share for the following US, UK and European contactors’ current financial years:

When it comes to the P/E ratio, BAE sits in the middle of the pack. But again, when it comes to considering it as a GARP investment, the Footsie company disappoints. Aside from Northrop and Safran, where predictions of falling earnings result in a negative PEG multiple, each of BAE’s peers sits in perfect GARP territory of 1 or below.

The verdict

While BAE Systems may not be the hottest GARP stock out there, it doesn’t necessarily make it a poor investment, in my book. In fact, there are several reasons why it’s one of my defence sector favourites. With 44% of its sales generated from the US, it’s less vulnerable to arms-related cuts under the Trump administration that many others.

Around 40%’s generated from other NATO members (most notably the UK) and the bloc’s ‘Enhanced Partner’, Australia. The remainder of sales come from fast-growing emerging markets in Asia and the Middle East.

I also like BAE Systems because of its broad range of capabilities. These range from building submarines and cybersecurity products, through to manufacturing electronics for spacecraft and rifle ammunition.

This gives the FTSE 100 company a range of opportunities to grow earnings. It also helps protect group profits from changing mission requirements that could affect sales in specific product areas.

In the current climate, I think BAE Systems shares are worth a very close look from investors.

Soaring demand for artificial intelligence (AI) stocks has driven the S&P 500‘s stunning gains of recent years. But investor interest has dulled since the beginning of 2025, reflecting fresh fears over high tech valuations and competition from China’s DeepSeek AI model.

With these concerns rumbling on, here are two alternative AI stocks I think investors should consider investigating.

Tritax Big Box

The AI revolution will require a huge ramp up in the number of data centres operating worldwide. Analysts at McKinsey & Company believe the global data centre market will grow 19%-22% between 2023 and 2030.

This is where warehouse operators like Tritax Big Box REIT (LSE:BBOX) come in. These businesses have the space to house all the hardware that make data centres tick. They are also benefitting from the e-commerce boom and post-pandemic supply chain changes.

Tritax itself last month entered the AI market by acquiring a 74-acre site in London. It plans to build “one of the largest data centres in the UK” on the land, with the potential to deliver 147 megawatts of power.

On top of this, the firm said that it had “created a further pipeline of potential data centre opportunities in key locations within the UK“.

During the last five years, this real estate investment trust (REIT) has provided an average annual return of 6.7%. I expect this to improve over the rest of the decade as interest rates fall and earnings rise. This will boost dividend growth along with the share price.

Remember, though, that Tritax shares could underperform if interest rates remain at or around current levels.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice.

Yellow Cake

DeepSeek’s ultra-efficient model has raised questions over whether the AI revolution will supercharge energy demand as was previously expected. This could have serious implications for companies involved in power generation like Yellow Cake (LSE:YCA), a major supplier of uranium.

Yet as things stand, power demand is still expected to soar from current levels. International Data Corporation (IDC) analysts, for instance, has tipped data centre energy consumption to more than double from 2023 to 2028.

Uranium businesses such as Yellow Cake — which has large physical holdings of uranium oxide concentrate — will likely play a vital role in powering the AI revolution. With the world switching down on oil and gas consumption, the nuclear and renewable energy sectors will have to grow rapidly to match current and future power demand.

I like Yellow Cake because — like Tritax Big Box — it could help me play the AI theme in a lower-risk way than, say, investing in semiconductor manufacturers or software developers.

In this case, even if DeepSeek sets a new standard in power consumption, or the AI sector fails to grow as rapidly as expected, global energy demand should still soar over the long term as the world’s population expands.

Since February 2020, Yellow Cake shares have provided an average annual return of 20%.

At £20.86, Greggs‘ (LSE:GRG) share price has plummeted in recent months, reflecting a sharp slowdown in its sales growth.

The former star baker has fallen more than 33% in value since late August, with most of the carnage coming after a shaky trading statement in early January.

The sausage roll specialist may remain under pressure if consumers keep the pursestrings tightened. But City brokers aren’t nervous. Broadly speaking, they think this FTSE 250 stock will rebound substantially during the next year.

38% increase expected

Some analyst forecasts for Greggs’ share price over the next 12 months do vary considerably. The most bearish prediction suggests the stock could decline a further 17% by February 2026, dropping to £17.33 per share.

On the other hand, the most optimistic analyst expects the baker to climb to £40.40 per share, representing a 94% increase from current levels.

Largely speaking, forecasts are overwhelmingly positive, with broker consensus implying that Greggs shares could appreciate 38% from today’s subdued levels. The average price target among 13 analysts covering the stock stands at £28.70 per share.

Value for money?

If these estimates are accurate, someone who buys Greggs shares today stands to make gigantic returns over the near term. Shareholder gains are also likely to be boosted by more tasty dividends. Greggs’ dividend yield for 2025 is currently a decent 3.3%.

Having said that, it’s important to bear in mind that — even after their price crash — Greggs shares don’t look especially cheap. This could limit any share price gains, and especially in light of how weak current market confidence in the stock is.

On the one hand, the company’s forward price-to-earnings (P/E) ratio of 15.1 times is below its decade-long average of 16.5-17 times. Its price-to-book (P/B) value has also fallen to multi-year lows, at 4.3.

However, this latter reading still sails above the widely regarded value benchmark of 1 and below. Greggs’ forward-looking price-to-earnings growth (PEG) multiple, at 4.5, is also high, on paper.

Given that its growth prospects have dimmed of late, I feel Greggs could struggle to rise and reclaim its premium P/E ratio in the near term. I don’t expect newsflow to improve any time soon that could reinvigorate its earnings outlook.

A fallen stock to consider

Yet while I’m not convinced Greggs’ share price will rebound in 2025, this doesn’t mean I think it’s a poor stock for investors to think about buying. Over the long term, I believe the company will remain a strong performer.

Since 2015, its share price has risen by a solid 139%. This has been driven by an ongoing store expansion programme that’s supercharged sales growth, and which has a lot more in the tank.

Greggs has around 2,600 stores on its books, and plans to raise the number even further to 3,500. Recent investments in supply chain capacity should help the company to hit this target too.

The baker also has other levers to pull to generate long-term profits growth. These include greater evening trading across its store estate, and growth across the delivery and click & collect segments.

I wouldn’t be surprised to see more near-term turbulence for Greggs shares. But over a longer time horizon, I expect them to recover strongly.

The FTSE 250 index is a popular hunting ground for growth investors. What attracts less attention is the index’s ability to provide a solid and growing passive income.

This is a bit of an oversight, in my opinion. After all, at 3.4%, the FTSE 250’s forward dividend yield is roughly in line with the FTSE 100 average of 3.5%.

Today, I’m looking for some of the FTSE 250‘s best high-yield dividend shares to consider. And I’ve come across the following:

As you can see, the dividend yields on these mid-caps sail comfortably past the index average. It means that someone who invested £20,000 equally across them today could — if broker forecasts prove accurate — generate £1,220 in passive income alone.

Green machine

Green energy stocks like Greencoat UK Wind play a critical role in Britain’s long-term energy policy. And the government’s making it easier for stocks like this to do business.

Last Friday (21 February), the Department for Energy Security and Net Zero announced further changes to the planning system, this time relaxing planning consent rules for fixed-bottom offshore wind.

This provides added opportunities for the likes of Greencoat by speeding up new wind farm delivery. By 2030, the government hopes to have 70-79 GW of onshore and offshore wind farm capacity. That’s more than double current levels.

Energy producers like Greencoat UK offer significant benefits to dividend investors. Profits and cash flows remain stable across the economic cycle, allowing them to provide a reliable long-term passive income.

Purchasing UK- or European-focused renewable energy shares could be a safer bet than buying those with US operations, given changing energy policy under President Trump. In fact, the likes of Greencoat could benefit from changes in the States by making it cheaper and easier to source wind power technology.

That’s not to say adverse political changes could be coming down the line later on. But until 2029 at least and the next general election, the trading landscape should, in my view, remain largely favourable.

Hear it roar

Lion Finance — which until this month traded as Bank of Georgia — is currently more vulnerable to political conditions at home. Its earnings could be negatively impacted if civil disorder persists in its core Georgian market. On top of this, the government’s choice between pivoting toward Europe or Russia will also have substantial long-term consequences.

But all things considered, I believe Lion can expect profits to continue rising strongly. A blend of Georgia’s booming economy and low product banking product penetration gives the company significant scope to continue growing earnings and dividends.

Latest financials on Tuesday (25 February) showed adjusted profits in Georgia leap 20.6% in 2024, driven by growth of 19.3% in its loan book. This encouraged it to raise the annual dividend by a hefty 12.5% year on year.

With a strong balance sheet, I expect Lion to keep paying large cash rewards in 2025, even in the unlikely event that earnings begin to weaken. Its CET1 capital ratio was 17.1% in December, far ahead of popular UK banking shares like Lloyds and Barclays.

The stock market might be hitting new record highs in 2025, both in London and New York. But there are still cheap growth shares knocking about that could generate very solid returns.

Here, I’ll highlight three that might be worth considering for long-term investors.

Something Nu

First up is Nu Holdings (NYSE: NU). This is the largest digital bank in Latin America, which means it operates no costly physical branches.

The fast-growing fintech company (known as Nubank) added 4.5m customers in Q4 alone. This brought its total customer base to a whopping 114.2m, despite only operating in three countries (Brazil, Mexico, and Colombia).

Yet the share price has dipped 27% since November, leaving the stock looking very cheap on a price-to-earnings (P/E) basis. Right now, the forward-looking earnings multiple is around 20, dropping to just 15.5 by 2026.

Now, nearly all the company’s customers today are in Brazil. To be precise, 101.8m, or roughly 58% of Brazil’s adult population. Therefore, if Brazil suffered any political or economic problems, the company’s growth and earnings could take a hit. This is a risk.

Longer term though, I’m bullish on the growth story. As well as expanding into new geographies, Nu has launched various other services. These include NuPay, NuTravel, and a mobile phone service (NuCel). Clearly, it likes to stick with the Nu theme!

Offshore energy markets

Next up, I think Ashtead Technology (LSE: AT.) is worth considering. The AIM-listed company is a leading provider of subsea equipment rental and solutions, serving the global offshore energy sector. That includes both renewables (wind turbines) and oil and gas.

Ashtead Technology has fuelled its growth through multiple bolt-on acquisitions. This has seen revenue and profits grow strongly. The firm expects last year’s revenue to have grown 52% to around £168m, with full-year adjusted EBITA (earnings before interest, tax, and appreciation) ahead of the consensus for £46.6m.

A key risk here is a prolonged slump in global energy prices, which could reduce offshore exploration and production spending, impacting demand for Ashtead’s equipment.

However, the £420m-capitalised company is forecast to grow its revenue by 35% this year, with earnings growing strongly too. It puts the stock on a cheap-looking forward P/E ratio of 11.5.

Finally, it’s worth noting that the average analyst price target here is 831p — around 62% higher than the current share price of 511p. While there is no guarantee it will reach this target, it shows that the small-cap stock might be significantly undervalued.

A moonshot stock

Finally, I want to highlight Intuitive Machines (NASDAQ: LUNR), which is a lunar exploration and space infrastructure business.

Roughly a year ago, it became the first commercial company ever to put a lander on the moon. And it’s just successfully launched its second on a SpaceX Falcon 9 rocket, with the lander expected to touch down on the moon on 6 March.

This is the riskiest stock because its mission or technology could fail, while it is also unprofitable. However, its revenue is expected to surge 188% to $229m this year, then 52% to $350m next year. It has won multiple contracts with NASA and could bag more.

Intuitive Machines has a small market cap of $2.5bn and zero debt. This gives the stock a reasonably cheap price-to-sales ratio of 3.5.

I’ve fallen for the charms of Legal & General (LSE: LGEN) shares. I bought them in 2023 because they looked like a brilliant income play, with some growth prospects a little bit further down the line. Now I’m having doubts.

With a stunning dividend yield of 8.3%, it’s easy to see the appeal for income seekers. 

However, with the share price down 1.4% over the last year and a hefty 17% over five years, a significant chunk of those dividends have been wiped out by capital losses. Is this a case of one step forward, two steps back?

Is the FTSE 100 stock manipulating me?

One red flag is its price-to-earnings (P/E) ratio, which currently stands at a steep 32 following a recent drop in earnings. That’s an eyebrow-raising figure. Legal & General traded at just six times earnings when I bought it in 2023. It looked a bargain then. I’m not sure it was.

I’m concerned that I’ve been gaslighted into believing this is a bargain, only to end up overpaying for a business that is struggling to grow.

In December, the company released a positive set of results that offered some reassurance. The board said it was on track to hit its guidance for mid-single-digit growth in operating profit across full-year 2024.

With forecast cumulative Solvency II capital generation of £5bn-£6bn between 2025 and 2027, the dividend looked well funded.

Investors welcomed these figures, and the shares have rebounded 7% over the last three months, to be fair. However, the recovery has been hesitant.

The Legal & General share price got another lift on 7 February, when CEO António Simões announced the sale of the US protection business to Japanese peer Meiji Yasuda in a $2.3bn deal. 

Meiji Yasuda will take a 5% stake in Legal & General, which Simões hailed as a “transformative transaction”. Again, the shares jumped. Again, it didn’t last. They’ve returned to their customary slumbers.

Is the dividend alone enough?

There is a significant opportunity ahead. As interest rates fall, Legal & General’s high yield could become even more attractive. 

Lower rates tend to boost financial stocks by making their debt obligations more manageable and increasing the value of their investment portfolios. In theory, this should help the company regain momentum.

Yet there are two problems. First, UK interest rates have been cut three times with little impact on the share price.

Second, there’s no guarantee they will be cut much further, at least in the short run, as inflation picks up.

Legal & General might not be a classic value trap, but it isn’t a clear-cut income play either. The stock sits in a frustrating middle ground, offering high dividends but little in the way of capital appreciation. For investors comfortable with that trade-off, it may still be a worthy addition to a portfolio.

I love getting my dividends, and I won’t sell. More gaslighting by Legal & General? Possibly. But so far I’m up around 20%, despite minimal share price action. I’ll treat any growth as a bonus. And carry on questioning my sanity.

The investment case for National Grid (LSE: NG) often revolves around its dividend. As a utility, it has strong cash flow potential – and the company’s policy aims to increase the dividend annually in line with a leading measure of inflation. But that dividend focus does not mean the National Grid share price does not matter.

After all, if an investor buys a share and its price falls, he could end up making an overall loss when he comes to sell, even taking into account dividends received along the way.

Then again, the opposite could happen: an investor might end up making a capital gain thanks to share price growth, having also received dividends during the period of ownership.

I’m not expecting much from this share price

Still, over the past five years, the flagship FTSE 100 index of leading shares has risen 33%. By comparison, the 8% growth in the National Grid share price during that period looks underwhelming. What is going on?

I reckon the share price action has been underwhelming because, frankly, the business performance has been underwhelming. At a price-to-earnings ratio of 23, the share actually looks quite expensive to me for what it is.

The good points about National Grid as a business have not changed much in recent years. It operates what is essentially a monopoly network for energy distribution. That is a potentially very lucrative business with long-term customer demand.

But the less compelling parts of the National Grid business model have also remained true in recent years. Prices are regulated and, crucially, the capital expenditure required to maintain let alone develop the distribution network can be high.

So, I see no particular reason for the share to soar any time soon given that state of affairs.

Is there long-term potential?

This week, the company announced the sale of its onshore US renewables business. That is part of its strategy to focus on networks and streamline its business.

At an enterprise value of around $1.7bn, the cash will come in handy. In the first half of its current financial year, free cash flows were under £1bn – and that included a rights issue that raised £7bn. Without that, the company would have recorded a large free cash outflow.

Such fundraising moves have helped the company keep spending on its network, which can help support future profitability. They have also enabled it to keep raising its dividend.

But the cost is shareholder dilution.

Indeed, one reason the National Grid share price has significantly underperformed the FTSE 100 in the past five years is because each share now represents a smaller stake in the business (and therefore its earnings) than it did five years ago.

This is a cash-hungry business. Although the rights issue meant net debt was sharply lower at the end of the first half than a year before, it still stood at £39bn.

I see a risk of further rights issues in future given the ongoing capital expenditure and debt servicing requirements. That could dilute shareholders even more.

The dividend appeals to me, but the risk profile definitely does not. I will not be adding National Grid shares to my portfolio.