Compared to S&P 500 tech giants, FTSE shares have historically delivered rather underwhelming returns. Yet there have always been some exceptions. And with numerous institutional forecasts projecting the flagship US index could experience a slowdown in 2026, the next 12 months could be an exciting time for UK stocks.
In fact, analyst teams across London have been actively assessing the current market climate, searching for businesses with the potential to beat US stocks over the next year. And they might have just stumbled on two potentially massive winners. Let’s explore.
48%+ potential returns
Most leading investment banks are projecting the S&P 500 to only grow by roughly 7% in 2026, following several years of phenomenal outperformance and the headwinds of elevated interest rates and inflation dynamics. But here in the UK, that’s apparently not the case for London Stock Exchange Group (LSE:LSEG) and RELX (LSE:REL).
Peel Hunt‘s placed a 13,500p share price target on LSEG – roughly 48% higher than where the stock is trading today. Meanwhile, the team at UBS have issued a 4,920p share price forecast for RELX, suggesting an even bigger 54% gain could be unlocked by this time next year.
In terms of money, that could be the difference between turning an initial £1,000 investment into £1,540, versus only £1,070 with an S&P 500 index fund.
Of course, that’s assuming these projections are accurate. So are these expectations actually realistic?
Drivers and risks
Let’s start with the UK stock market operator. While historically this company has made most of its money through listing fees and IPOs, management’s steadily been diversifying the business model in recent years. The firm’s now a major provider of financial data analytics and AI solutions.
The group’s recently partnered with Microsoft to create new AI-powered products and digital services to bolster recurring subscription-style revenues. This strategy’s still underway, but the early results are encouraging, generating substantial cash flows that Peel Hunt believes will propel the share price even higher.
What about RELX? This too is a data-driven enterprise providing critical insights to the scientific, legal, and banking sectors, among others. Here, management’s also investing in building a suite of AI-enabled toolkits to help clients find the insights needed to execute their strategies.
Given the critical importance and ever-rising demand for data and analytics, the long-term potential of both firms looks quite promising. And it’s easy to see why the investing experts are so bullish.
However, there’s still a major risk to consider. These data-oriented businesses don’t directly compete with each other, yet both face enormous competition from other rival firms that do.
Defending as well as stealing market share from other analytics firms looking to cash in on the data gold rush could require some lower margin tactics. Perhaps the most common is deliberate subscription price undercutting, which squeezes profitability.
The bottom line
All things considered, both of these FTSE stocks look like they have market-beating potential. Beyond their growth prospects, neither stock’s outrageously overvalued like so many competing US rivals. And while the competitive threats can’t be ignored, these risks may be worth considering given the potential projected reward.
But these aren’t the only stocks I’ve got my eye on right now.
