Two promising UK value stocks I would consider for a Stocks & Shares ISA next year

Things have come to a bit of a standstill on the FTSE 100 lately, with the index down nearly 3% over the past month. Now I’m looking further afield at lesser-known but promising UK shares for my Stocks and Shares ISA next year.

I often find that when times are tough, the little guys come out of the woodwork and start to shine.

Here are two that I think could see significant growth in the coming years – if the economy plays along!

Train line

Train line (LSE: TRN) is a digital ticket booking service that has gone from strength to strength lately. The share price has risen by as much as 41.5% in the past year. Not bad for what is essentially a train and coach comparison site, helping users find the most cost-effective or time-efficient journey anywhere in the EU.

I remember when it was just a small British train booking site called thetrainline.com. It was rebranded as Trainline in 2016 before expanding across Europe and going public in 2019. Things were a bit shaky at first, but in recent years it seems to have found its feet (or rails).

The company now has a market capitalization of £1.85 billion and a turnover of £114.5 million as of August this year. It has a strong net profit margin of 14.8% and earnings per share (EPS) that rose 300% year over year.

On the other hand, its high price means it also has a high point price-earnings ratio (P/E) ratio of 32.8 – well above the industry average of 22.8. That makes further growth less likely. Other risks threatening profits include travel restrictions and competitor apps, especially from low-cost alternatives such as budget airlines. On average, traveling by train remains relatively expensive compared to short-haul flights.

Still, recent performance suggests it must be doing something right, so it’s firmly on my list of ISA options for 2025.

XPS Pension Group

XPS Pension Group (LSE: XPS) is a British pension consultancy providing a variety of services focused on pensions, investment advice and administration.

The main reason I like it is its slow but steady growth. I’m a big fan of investments that I can forget about for years without worry. Moreover, it has a yield of 2.8%, although it has only recently started paying dividends, so its reliability is not yet certain.

The second reason I like it is its solid balance sheet, with low debt and sufficient interest coverage. It has a high net profit margin of 27.2% and a high return on equity (ROE) of 29.1%. Moreover, the price-earnings ratio of 14.5 has been declining for some time.

However, one recent development worries me. Co-CEO and director Ben Bramhall recently sold 51% of his shares at slightly below the current price. It’s impossible to say exactly why – maybe he needed the money – but it’s a risk nonetheless. When an insider sells something, we have to wonder if they know something that we don’t!

Looking ahead, sales are expected to grow by 12% over the next year, while profits are expected to decline by around 10%. This won’t necessarily affect the share price, but it could limit growth.

With steady growth and a good dividend yield, I’m happy to put it on my list of potential ISA additions for next year.