With hundreds of UK growth shares to pick from, it can be tough for investors to know which companies are the best investments. But institutional analysts are constantly on the prowl for lucrative opportunities. And as 2026 kicks off, several stocks have been highlighted as potentially terrific buys by these professionals.
Here are two of the recent top picks.
1. An evolving SaaS business
The analyst team at Bank of America has flagged Kainos Group (LSE:KNOS) as a potentially top stock to consider in 2026, upgrading its recommendation from Underperform to Buy.
This change of tone’s pretty drastic. But looking at the company’s recent achievements, it’s not hard to see why. Following its latest results, Kainos is now standing on a record contracted backlog of £396.9m alongside £227.9m in bookings – 27% higher than a year ago.
Digging deeper, the business is benefiting from structural tailwinds in public sector spending, particularly within the NHS and wider government-backed AI initiatives. But the firm’s relatively new software-as-a-service (SaaS) offer that piggybacks the Workday platform is also picking up steam.
Its SaaS arm has reached £77.5m in annual recurring revenue as of September 2025, on track to surpass £100m by the end of 2026, and over £200m by 2030. And with order and revenue momentum building in North America, Kainos’ growth trajectory looks like it’s accelerating.
This promising outlook is why I’ve already snapped up shares for my own growth portfolio. However, it’s important to recognise the risks. Given the state of the UK’s finances, public sector spending could be vulnerable to budget cuts, handicapping Kainos’ growth potential.
Its commercial software does provide some revenue diversification. However, these too could be exposed if economic conditions deteriorate – something growth investors need to consider carefully.
2. Opportunities in facilities management
Mitie Group‘s (LSE:MTO) another business among growth shares that institutional investors have on their radars. The team at Peel Hunt has even issued a 191p share price target, suggesting potential double-digit growth could be on the horizon.
Just like Kainos, Mitie’s been delivering some robust results of late. Thanks to a combination of organic and acquisitive growth, management’s delivered solid double-digit revenue growth while simultaneously securing a record £3.8bn in total new contract awards.
Yet this could be just the tip of the iceberg. Thanks to its transformational Marlowe acquisition last August, management added over £300m in annual high-margin revenue. And with £30m in expected cost synergies, both operating profits and free cash flow generation are expected to step up significantly throughout 2026 and beyond.
However, acquisitions don’t always pan out. Digesting Marlowe seems to be progressing well so far, but there remains significant integration risks.
Unexpected disruptions and culture clashes often create unforeseen costs and headaches for acquisitive businesses. And with fierce competition within the facilities management sector, any missteps could create opportunities for Mitie’s rivals.
Nevertheless, given the group’s emerging strength and prudent leadership, this business could also be worth mulling. Of course, there are plenty more growth shares with promising potential to explore.
