Up 209% since last Christmas (2024), Airtel Africa (LSE: AAF) is one of the UK’s top growth stocks of the past year. As one of my fellow Fools pointed out, it’s grown seven times faster than Nvidia in 2025.
The shares were languishing at a three-year low in November last year, not long after I decided to take a chance on the beaten-down company. Now trading at 326p each, they’ve more than tripled in value.
But while I’m grateful for the returns, I’m not planning to buy anymore of the shares this Christmas. That’s because the spectacular rally has pushed the company’s valuation to sky-high levels. Further growth from here would be hard to achieve.
Instead, I’m hoping to lock in some gains from another FTSE stock that looks significantly undervalued.
3i Group
After a shocking dip in recent months, 3i Group (LSE: III) now looks like a compelling recovery candidate for 2026. The shares plunged 30% in the two weeks following its H1 results to 30 September 2025, triggered by weakened guidance on its largest holding, Action.
The discount retail chain makes up two-thirds of 3i’s portfolio. This year, it’s faced softer consumer confidence despite strong like-for-like trading and record store openings in Switzerland and Romania.
However, recent weeks have seen insiders signal confidence, buying nearly £5m in shares. CEO Simon Borrows alone invested £1m (30,000 shares at £33.67), with Senior Partner Peter Wirtz spending £854k and Non-Executive Director Peter McKellar, £862k. These purchases, made above recent lows around £29.57, suggest executives view the market’s reaction as overdone.
Recovery potential
Based on the above and backed by a solid set of fundamentals, I think 3i’s recovery potential is strong. Its latest results saw total return on opening net asset value (NAV) hit 13% (£3.29bn), surpassing targets. Meanwhile, liquidity reached £1.64bn and net debt reduced to £772m – not to mention a 20% dividend hike. Action’s valuation held steady at 18.5 times earnings, supported by a refinancing boost and £944m capital return to 3i (partially reinvested for a 62.3% stake).
General consensus seems to point to a market overreaction due to Action concentration risks. Yet executives clearly agree it’s a buying opportunity, even though the recent weak performance remains a key risk given inflation and rivals.
Still, with strong compounding platforms and prudent funding, I think it’s well-positioned for a strong rebound – if consumer trends stabilise. It’s already climbed 10% since its November low, so that rebound may have already begun.
Final thoughts
At the Fool, we typically aim to promote long-term investing with a 10- to 20-year outlook. This approach helps investors avoid losses from trading too frequently or panic-selling during market downturns. As such, not too much focus should be put on rapid, short-term gains.
However, every now and then, an undervalued growth opportunity comes along that’s hard to ignore. Investing in undervalued growth stocks can be a great way to lock in short-term gains when (if) a recovery kicks in. But if doing so, always ask the question: “would I comfortably hold this stock for 10 years?”
If not, it may be better to look at other options. In this instance, I think 3i Group is a great stock to consider for long-term investors – and it currently looks to be trading at an attractive price point.
