It’s been a rough month for FTSE shares, with many looking beaten down and selling cheap. For patient investors, these moments offer a chance to grab shares in quality businesses at undervalued prices.
This is where things get interesting. Some analysts now believe a handful of mid‑cap names could double or more over the next year. Three that keep popping up in my stock screener are Telecom Plus (LSE: TEP), Craneware, and GlobalData (LSE: DATA).
But cheap does not automatically mean good value. So it is worth lifting the bonnet and checking what we’re really looking at.
Telecom Plus
Telecom Plus is a multi‑utility provider selling gas, electricity, broadband, and phone contracts under its Utility Warehouse brand. It is unusual in that it grows mainly by word‑of‑mouth referrals, which helps keep marketing costs down and customers sticky. On paper, it looks very appealing for a defensive business: a 7.56% dividend yield, a solid price-to-earnings (P/E) ratio of 15.7, and a chunky 28.8% return on equity (ROE).
The main risks are that utilities are tightly regulated and competition is fierce. With an historically high payout ratio, some have questioned just how far that big dividend can stretch if growth slows.
Still, analysts are optimistic, with the average 12‑month price target expecting 100% growth from here. That suggests the market might be underestimating its ability to keep adding customers and turning that into profit.
Craneware
Craneware sells management software to hospitals for billing, pricing, and reimbursement – a niche, but important, part of the healthcare system. Earnings are up 45% year on year, helped by rising revenue, strong margins around 30%, and ongoing demand as hospitals digitise their back‑offices.
On top of that, Craneware has very little debt compared to equity, which gives it more resilience if interest rates stay higher for longer. The flip side is that the shares already trade on a high valuation and can be volatile – any slowdown in US hospital spending or IT budgets could quickly knock sentiment.
GlobalData
GlobalData is a data and analytics group that sells subscription research to companies and governments across sectors like healthcare, technology, and consumer goods. In its latest year, it delivered 12.8% revenue growth, helped by recent acquisitions and an ‘AI‑first’ push to make its platform more useful to clients.
Earnings are up 16.7% so far this year, and analysts see scope for further margin expansion as management executes its growth plan. The debt‑to‑equity ratio of 0.63 is manageable, but it’s higher than Craneware’s, so the balance sheet is not quite as pristine.
Key risks here are that some of that growth has come from deals rather than pure organic progress. If a recession rears its ugly head, data and research spending could be cut, hurting profits.
Final thoughts
All three shares have credible growth opportunities, but Telecom Plus stands out to me as one worth considering. It combines essential services, strong profitability, and a very generous yield.
All that at a valuation that doesn’t look too stretched for a potential long‑term compounder.
Of course, none of these should be ‘bet the farm’ ideas. But as part of a diversified portfolio – especially inside an ISA where gains and dividends are shielded from UK tax – a careful allocation could add some real excitement to long‑term returns.
Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.
