One of many FTSE 250 shares I maintain has had a tough 2024. It lower its dividend. The share price has fallen 18% up to now this yr – and 45% over the previous 5 years.

There could possibly be extra dangerous information to come back, I reckon, which means the share might fall additional within the coming yr.

Then again I proceed to carry it partly as a result of I believe its price has fallen greater than justified and, on the present stage, it presents a possible discount for a long-term investor like me.  

Effectively-known retailer

The corporate in query is Topps Tiles (LSE: TPT).

It truly operates underneath numerous manufacturers, however the Topps model itself is notably well-known after a long time within the enterprise. Between its giant property of retailers and sizeable digital footprint, the corporate has established a powerful place within the tiles market. In actual fact, it’s accountable for certainly one of each 5 tiles offered throughout the nation.

Nonetheless, Topps has had an undeniably powerful yr. Demand for tiles has been shrinking and, although Topps says it has gained market share, a shrinking market means its gross sales have additionally been falling.

On high of that, it purchased property from a failed rival in a deal now being investigated by competitors authorities and has been criticised by Topps’ largest shareholder.

Why 2025 could possibly be a turnaround yr

Personally although, I believe that deal was probably one of many higher strikes the FTSE 250 agency made this yr. It has probably elevated its attain in skilled markets, equivalent to architectural practices.

Long run, Topps stays targeted on the technique of rising gross sales. Whereas market demand might ebb and movement with the housing market I count on that demand for tiles and flooring coverings might be substantial over the long term. By constructing a powerful place in that market, I see Topps as being in a very good place for future profitability.

If it may possibly combine the acquisition and show that current weak efficiency in its enterprise is being addressed, I believe the Topps share price may transfer up in 2025. The present market capitalisation of £76m appears low to me.

Plenty of work to do

In follow although, issues may additionally go from dangerous to worse.

The broader tile market may proceed to wrestle, hurting Topps within the course of. Weak client spending may imply some homeowners delaying non-essential repairs. I see that as a threat to Topps’ skill even to keep up its present gross sales revenues, not to mention the corporate’s goal of rising its gross sales to a median of £1m per day.

So I see a chance that the Topps Tile share price may tread water, or fall additional, in 2025.

But long run, I really feel optimistic primarily based on what I see as an unreasonably low present valuation. I’m hopeful the share will bounce again, maybe as quickly as subsequent yr if gross sales traits enhance. I plan to maintain holding the share.