Engines ready

The first one is easyJet (LSE:EZJ). The well-known budget airline has seen its share price fall 25% over the past year and 29% in the past three months. At first glance, the dip looks alarming. But when I dig a little deeper, it starts to resemble the kind of temporary turbulence long-term investors often learn to ignore.

The primary culprit has been a sharp shift in the macro environment rather than any collapse in the business. The escalation of tensions in the Middle East has pushed jet fuel prices sharply higher. This immediately squeezes easyJet’s profit margins.

At the same time, investors have grown nervous about inflation and interest rates staying higher for longer, raising concerns about discretionary spending, such as holidays. Add in a weaker pound (which inflates dollar-denominated fuel costs), and you have a perfect storm for the company.

Despite the share price weakness, demand remains robust. Q1 results from the end of January showed that summer bookings are strong. In fact, the CEO noted the “largest-ever January booking period.”

The holidays division continues to grow rapidly. This points to a business that’s still benefiting from structural demand for low-cost travel across Europe.

From a valuation perspective, the disconnect is even clearer. The shares are currently trading on a price-to-earnings ratio of 5.4, which is exceptionally low for a company with solid growth prospects. If the situation in the Middle East eases over the coming month or so, I think the stock could rally to a much fairer valuation.

A transformation titan

Another option is GB Group (LSE:GBG). The tech firm provides digital identity verification and fraud prevention services, helping businesses confirm who their customers are and detect suspicious activity.

The stock’s lost 37% over the past year, with 25% of that loss occurring in the past three months. The situation in the Middle East has been a factor, with the company also having flagged that tariff-related and geopolitical uncertainty would weigh on growth, particularly in the US.

The business is also in the process of migrating to a simpler operating model and a single global platform. In the half-year results from late last year, early signs of progress came through. Revenue rose 1.8% versus the same period last year, with adjusted operating profit up 1.9%. Granted, nothing to shout about, but certainly the steadying of the ship.

I think the worst is now behind the company, and the ongoing changes should materially boost profits in the coming year. The short-term move to me feels like a classic case of weak sentiment overwhelming a business that’s actually making steady operational progress.

Of course, if geopolitics provides more headaches this year, then it remains a risk for GB Group. But, on balance, I think both easyJet and GB Group have been oversold and could be worth considering.

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Admittedly, much of it’s driven by speculative AI mania, but tech remains the place to look when it comes to growth.

But what about closer to home?

The UK has a rich history in tech — the work of Charles Babbage and Alan Turing laid the conceptual foundations for modern computing. As recently as the 80s, some of the earliest home computers came out of the UK.

But since the 90s, focus shifted to the US, where Microsoft and Apple dominated the landscape. Now, a new paradigm is emerging — with AI and data analytics taking front and centre.

So could the UK regain its place as a major tech hub? Here are two tech stocks that could help it do just that.

A rising infrastructure star

Beeks Financial Cloud Group (LSE: BKS) is a UK‑listed cloud infrastructure provider offering low‑latency compute, connectivity and analytics to trading firms and exchanges.

Its core products include Public/Private Cloud for brokers and funds, and Proximity/Exchange Cloud, which are dedicated environments deployed inside or near major exchanges.

In the year to June 2025, revenue grew about 26% to roughly £35.9m, almost doubling statutory profit before tax. This was largely driven by a three-fold rise in sales of its Exchange-focused products.

After shifting some deals to revenue‑share models, it’s now launched an AI‑driven edge analytics product, aimed at boosting long‑term margins.

But revenue relies on a relatively small number of large contracts, so non‑renewals or pricing pressure on these could hit revenue disproportionately. Since its competing with much larger global cloud providers, this is a significant risk.

I still think it’s worth considering but like most tech stocks, it’s high-risk/high-reward.

The digital identity angle

GB Group (LSE: GBG) is a software company that’s capitalised on the need for digital identity verification. It provides location intelligence and fraud prevention used in e‑commerce, fintech, online banking and other regulated or high‑risk digital transactions.

Essentially, it builds AI-driven software that can rapidly verify if someone is who they claim to be. With online transactions rising and digital banking taking over, the need to meet KYC and AML regulations is skyrocketing. The growth potential is clear: every new digital service, payment method or online account increases the need for digital identity and fraud controls.

It may be worth a closer look but, like Beeks, we’re talking about a highly competitive space. The key challenge for GB Group is finding ways to provide a premium service at a better rate. If it can’t do that, it may end up a non-starter.

Final thoughts

Silicon Valley may still hold the torch when it comes to tech innovation but the UK isn’t out of the race yet. The S&P 500 is already lagging the FTSE 100 in 2026, so this could be our year.

Both Beeks and GB Group exhibit strong growth potential but they’re not without risk. To limit volatility in a growth-orientated portfolio, many investors opt to include some defensive stocks. Fortunately, several excellent such stocks exist on the FTSE 100, many of which I’ve recently covered.

The post I thought there were no good tech stocks to buy in the UK. Boy, was I wrong! appeared first on The Motley Fool UK.

So should I take this opportunity to dive in before they hit the big time? I decided to take a closer look.

What’s changing?

Stocks being upgraded to the index include GB Group (LSE: GBG), Pan African Resources, Princes Group and Shawbrook Group. WPP will also join the index after being demoted from the FTSE 100.

British Land will be upgraded from the FTSE 250 to the FTSE 100. Meanwhile, European Opportunities Trust, Foresight Solar Fund, PayPoint and Pinewood Technologies Group will drop from the mid-cap index.

All this will happen pre-Christmas (22 December). But which stocks are worth considering?

Since WPP’s being demoted, that clearly isn’t a top choice. The canned goods and drink company Princes Group is well-known but not exactly exciting, and Shawbrook Group’s a newly-listed challenger bank with little history to speak of.

GB Group, however, looks like an interesting up-and-comer. It provides identity data intelligence products, which sounds like a business with growth potential. Similarly, gold miner Pan African Resources is already up 210% this year and doesn’t look like it’s slowing.

Those two piqued my interest.

Diversified investments

Both Pan African Resources and GB Group present contrasting investment propositions ahead of their FTSE 250 inclusion. While the former offers dividend-driven value in gold mining, the latter represents a growth-stage software-as-a-service play, each carrying distinct risk profiles suited to different portfolio objectives.

This means they could appeal separately to individual investment styles, or add diversification to a single portfolio.

Pan African’s case is fairly simple — so long as the price of gold continues to rise, so will its profits. Able to process gold at an all-in cost below $1,000 per ounce, anything above this is profit. With gold currently trading at around $4,000 an ounce, future cash flow visibility is excellent.

Of course, if the price of gold dips, the share price will likely follow suit.

GB Group presents a more complex investment case. The company provides identity intelligence and fraud prevention solutions across financial services, e-commerce, and gaming verticals, serving over 10,000 clients globally. 

Its growth credentials are clear: recurring subscription revenues, high gross margins and 97.8% net revenue retention. In its full-year 2025 results, revenue reached £283m, with adjusted operating profit at £67m and earnings per share up 14%.

But the identity verification market faces evolving cybersecurity threats, including KYC document fraud schemes and deepfake attacks. Such failures can be financially and reputationally devastating, requiring continuous technology investment to stay ahead of threats.

My verdict

I think both these stocks are worth considering, particularly GB Group. Aside from its growth prospects, it also has a 1.77% dividend yield and recently extended its share buyback programme by £10m.

But don’t just take my word for it — analysts following the stock expect growth of 50% on average in the next 12 months. Overall, it sounds like a compelling opportunity, so I plan to buy the shares before the listing date.

The post The FTSE 250 gets 5 new stocks this month! Should I get in early? appeared first on The Motley Fool UK.

Here, I’m going to highlight three I’m backing for 2023. At their current prices, I reckon these UK shares have a lot of potential.

A China reopening play

Let’s start with Prudential (LSE: PRU). It’s an insurance and savings company focused on the Asian and African markets. At present, the stock has a forward-looking price-to-earnings (P/E) ratio of just 10.

Prudential shares underperformed last year due to the strict Covid restrictions in place in China. These hindered the group’s ability to sell its financial products to consumers.

The outlook is improving though. Recently, China has begun to relax those Covid restrictions. And there is talk that the Hong Kong/Mainland China border – which has been closed for three years – could be reopen later this month. This could lead to much higher revenues and earnings for Prudential.

The major risk here is that China goes into lockdown again. This would most likely send the share price lower. I’m comfortable with this risk though. I’ll be holding on to this stock in 2023.

Takeover speculation

Next up is GBG (LSE: GBG). It’s a leading provider of identity management and fraud prevention solutions. Currently, it has a forward-looking P/E ratio of about 15.

While the valuation here is above the UK market average, I think it’s quite low relative to what’s on offer. This is a company with a solid growth track record (over the last four financial years, revenues have roughly doubled). It’s also a company that’s set to benefit as the world becomes more digital.

It’s worth noting that last year, GBG was the subject of some takeover speculation. No official offer for the company came in the end. However, the fact that the company attracted takeover interest suggests I’m not the only one who sees the stock as cheap right now.

Of course, if tech stocks continue to underperform, GBG’s share price could head lower. However, at current levels, I like the risk/reward. I bought some more shares recently.

An electric vehicle stock

Finally, we have Volex (LSE: VLX). It’s a small UK manufacturing company that specialises in power and connectivity solutions. Currently, the P/E ratio here is about 11.

Volex is growing at an impressive rate right now, thanks to its exposure to the electric vehicle (EV), data centre, and medical equipment markets. For the 26 weeks to 2 October, revenue was up 22%, while underlying operating profit was up 18%.

Looking ahead, analysts expect revenue for the year ending 3 April 2023 to rise 13% year on year. Given this level of growth, I think the valuation here is quite low.

Of course, there’s no guarantee the stock will perform well for me in 2023. For the stock to rise, sentiment towards small-cap shares needs to improve.

I’m optimistic about the stock’s long-term prospects however. If I didn’t already have a substantial position here, I’d be buying more shares today.

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Fast forward to today, and that now looks like a great call. Last week, GB Group’s share price shot up more than 30% after Chicago-based private equity firm GTCR said that it is considering a possible cash offer for the AIM-listed technology company.

I hold GB Group shares in my own investment portfolio. So, I’m pretty happy that the share price has received a boost on the back of the takeover talk. But what’s the best move now, though? Should I take my profits and move on to other investment opportunities? Or hold on to see what happens?

GB Group takeover: what we know

Let’s start by looking at what we know about the potential takeover.

To be clear, a formal takeover offer has not yet been made. In a brief statement, GTCR said: “There can be no certainty that any firm offer will be made, nor as to the terms on which any firm offer might be made.”

However, GB Group has said that any proposals received will be evaluated by its board of directors along with its advisers.

It’s worth noting here that, in accordance with Rule 2.6(a) of the UK Takeover Code, GTCR has until 5pm on 4 October 2022 to either announce a firm intention to make an offer for GB Group or announce that it doesn’t intend to make an offer for the company.

This means that we should have more details about this potential takeover offer in the next few weeks.

What I’m doing now

In light of the information above, I’m going to be holding on to my GB Group shares for now. There are a couple of reasons why.

Firstly, I’ve been burnt in the past by selling shares soon after a takeover was announced. I did this with Sky shares back in 2016, and they ended up rising much higher after multiple bidders emerged.

If GTCR does make a bid for GB Group, I wouldn’t be surprised to see more bidders emerge. To my mind, there’s a lot to like about this company. Not only does it operate in a high-growth industry, but it also has a wide range of blue-chip customers such as Revolut, Volkswagen, and BNP Paribas.

Secondly, I’d expect GB Group’s board to negotiate a good deal if an offer is made. It’s worth noting here that last year, shares in GB Group were trading above 900p. Now, tech valuations were excessive last year and market conditions have changed this year. But I would have thought 750p+ is achievable for a takeover offer. That would equate to around 35 times this year’s earnings forecast.

Now, of course, this approach of holding on for further gains could backfire on me. If no offer is made, GB Group’s share price is likely to fall back.

However, given that I’m a long-term investor and I’m bullish on the company and its growth prospects, that would not be the end of the world for me.

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The good news for long-term investors like myself is that the weakness across the AIM has thrown up some very attractive investment opportunities. With that in mind, here’s a look at three stocks I’d buy today.

A top FinTech company

One of my top picks right now is Alpha FX (LSE: FX). It’s a fast-growing, founder-led provider of financial solutions that specialises in FX risk management and mass payments.

A trading update posted last month showed that Alpha FX has plenty of momentum at present. For the six months to 30 June, revenue was up 35% to £46m. Meanwhile, the company grew its client base significantly over the period, increasing its alternative banking accounts by 239%.

After a share price pullback this year, Alpha FX shares are valued attractively, in my view. With analysts expecting earnings per share of 62.2p for 2022, the forward-looking P/E ratio is about 29. I don’t see that as high, given the strong level of growth here.

Of course, if growth slows, the share price could decline given the high valuation. I’m comfortable with this risk however, given Alpha’s track record.

A cybersecurity play

Another AIM stock I’d snap up today is GB Group (LSE: GBG). It’s a leading provider of identity management solutions that serves blue-chip companies globally (HSBC, Volkswagen, and ASOS are just some of its customers).

GB Group shares have plummeted this year and I think the fall is overdone. In the company’s recent full-year results, for the year ended 31 March, it posted record revenue of £242.5m (up 11.4% year-on-year) and adjusted operating profit ahead of original market expectations. And looking ahead, the group said it’s well-placed to successfully achieve its strategic and financial objectives in FY2023 and beyond.

A risk to consider here is that the company could be impacted by the weakening economy. With the stock now trading on a P/E ratio in the low 20s however, I think the risk/reward profile here is attractive.

Video game champion

Finally, I’d also buy Keywords Studios (LSE: KWS). It’s a leading provider of technical services to the video gaming industry. This is another AIM company that has momentum.

Recently, it said it expects to post total revenue growth of around 34% for the six months to 30 June. Adjusted profit before tax is expected to be up around 35% year-on-year. It added that it had seen “robust demand” for all of the group’s services.

“Keywords has started the year very strongly, building on the momentum achieved in 2021,” commented CEO Bertrand Bodson.

It’s worth noting that the growth of the gaming industry could slow down a bit after Covid. This could potentially impact Keywords Studios’ growth. The forward-looking P/E of 32 here doesn’t really leave a margin of safety, so this is a risk to keep in mind.

I’m thinking long term here however, and I reckon this AIM stock should do well as the gaming industry grows over time.

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This AIM stock is cheap

First up, Volex (LSE: VLX). It’s a British manufacturing company that specialises in power cords and cables. Its products help power a range of electronic devices including computers, medical equipment, and electric vehicles (EVs).

Volex’s recent full-year results, for the year ended 3 April, showed the company has a lot of momentum right now. For the year, group revenue was up 39% to $614.6m, while EV revenue alone surged 96% to $104.2m. Underlying profit before tax rose 24% to $51.4m.

This momentum is not reflected in the company’s valuation however. Right now, the stock trades at just 11 times this year’s earnings forecast. At that multiple, I see a huge amount of value.

It’s worth pointing out that debt has risen in recent years as a result of acquisitions. This adds risk.

All things considered however, I think the risk/return proposition here is attractive.

High-growth market

Next is GB Group (LSE: GBG). It’s a leading provider of identity management solutions that serves over 20,000 customers globally.

In recent years, this AIM stock has often had a very high valuation. Today however, it’s a different story. After a big share price fall in 2022, GB now trades at just 19 times this year’s estimated earnings.

At that level, I see a lot of value on offer. GB has a good track record when it comes to revenue growth. Over the last five years, it has grown its top line by about 180%. Meanwhile, the growth potential ahead is significant, given the growing prevalence of online fraud.

It’s worth noting that GB has made a major acquisition recently. So there’s some integration risk here.

With the P/E ratio now under 20, I think the stock is worth buying though. At that valuation, I wouldn’t be surprised if GB attracted takeover interest.

Major opportunities ahead

Finally, I’d also buy Alpha FX (LSE: AFX). It’s a founder-led financial services company that offers FX risk management and payments.

Alpha FX has grown at a phenomenal rate in recent years, registering three-year revenue growth of about 230%. And looking forward, the company expects to keep growing. In March, management said it sees “major opportunities” across all of its businesses.

Yet like a lot of other AIM stocks, Alpha FX has seen its share price fall significantly in 2022 as sentiment towards small-caps has deteriorated.

I’m looking at this share price weakness as a buying opportunity as I expect the stock to rebound when the economic backdrop improves.

This stock isn’t the cheapest around. Currently, the forward-looking P/E ratio is about 25. So the company will need to keep growing at a strong rate or its share price could fall.

But I’m confident it will, as its CEO is very ambitious.

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Here, I’m going to highlight two UK growth stocks that have substantial share price upside right now, according to City analysts. I own both of these stocks, and I’d be comfortable buying more shares in each at current levels.

Significant share price upside

Let’s start with online fast-fashion retailer Boohoo (LSE: BOO), which owns a number of popular brands including Boohoo, PrettyLittleThing, and Debenhams.

It currently trades at around 89p. However, analysts at Deutsche Bank have a 12-month price target of 230p. If Deutsche’s analysts are right, a £1,000 investment in BOO could grow to around £2,585 (ignoring trading commissions).

Like many other e-commerce retailers, Boohoo has experienced recent challenges. Costs have risen and supply chain issues have meant that the company has been unable to get goods to customers. As a result, the group has had to downgrade its growth forecasts. It now expects growth of 12-14% for the year ending 28 February 2022.

I’m convinced that the group has what it takes to bounce back however. Brand power remains strong. This is illustrated by the fact that on Instagram, Boohoo and PrettyLittleThing have 11m and 17.6m followers respectively. That compares to figures of 6.7m and 12.5m in September 2020.

Meanwhile, the group recently started production at its own factory in Leicester. This should help ease supply chain issues, and also help fix some of the ESG issues the company is facing.

I’ll point out that not all brokers are so bullish on Boohoo. Analysts at Barclays, for example, have an ‘underweight’ rating on the stock and a price target of 85p. They believe things could get worse before they get better.

I’m in Deutsche’s camp here however. With the stock currently trading on a forward-looking P/E ratio of less than 15 after a big fall over the last year, I see considerable share price upside here.

Growth star

Another UK stock that has plenty of upside, also according to the City, is GB Group (LSE: GBG). It’s a leading provider of identity management and fraud prevention solutions that counts the likes of HSBC and Betfair among its customers.

Its share price is currently around 581p. However, analysts at Barclays have a price target of 1,000p. That means that £1,000 invested could grow to about £1,720, if Barclays’ analysts are right (there’s no guarantee, of course).

GB Group has a great track record when it comes to growth. Over the last five financial years, revenue has climbed from £73m to £218m. I think the top line is likely to climb much higher in the years ahead, however. That’s because the company is well-placed to benefit from the growth of e-commerce, as well as the rising risk of digital fraud. For the year ending 31 March 2023, analysts expect revenue of £291m.

GB’s valuation does add risk to the investment case. At present, the forward-looking P/E ratio is about 27. If future growth is below investors’ expectations, the stock could underperform.

Overall however, I think the risk/reward here is attractive. With it down considerably over the last six months, I think it’s a good time to be buying.

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An AIM share for digital identity

The first company is GB Group (LSE: GBG), a software provider for digital identity solutions. It operates through three divisions: Identity, Location, and Fraud.

There are a lot of reasons I like the stock. Firstly, it’s able to generate excellent quality metrics, such as consistently high (and increasing) operating margins. This shows me that the company is becoming more profitable over time, which gives scope for things like share buybacks and dividends.

I also see a structural tailwind for the company in the months and years ahead. Customer activity is moving online more nowadays, so GB Group’s identity software solutions will be in increasing demand, in my view. Looking ahead into next fiscal year (the 12 months to 31 March 2023), and growth seems to be improving. Revenue and net profit are expected to grow by 26% and 24%, respectively. This means the shares trade on a price-to-earnings multiple of 27, which is reasonable for a technology company growing by double-digits to my mind.

There are still risks to consider, of course. For one, GB Group disposed of two businesses recently – Marketing Services and Employ & Comply – which could have disrupted the overall Group performance. GB Group is also acquisitive, so this brings execution risk.

But on balance, I think this is a top technology company on AIM. So I’d buy the shares today.

A real estate investment trust

The next AIM share is Warehouse REIT (LSE: WHR), which is a real estate investment trust (REIT) specialising in managing a portfolio of warehouse properties.

A main reason I’m bullish about Warehouse REIT is the growth in e-commerce. This was given a huge boost during the pandemic. Indeed, online retail sales in the UK reached just under £100bn in 2020, and up from £76bn in 2019. A crucial part of e-commerce is the logistics infrastructure behind the scenes. Warehouse REIT operates a portfolio of urban warehouses across the UK as part of this infrastructure. Its tenants include big names such as Amazon, DHL, and Asda.

Profit growth has been excellent recently. For the 12 months to 31 March 2022 (FY22), earnings per share (EPS) is expected to increase by 18%. In the following FY22, EPS is forecast to grow again at a still reasonable 12%. Based on a forward price-to-earnings ratio, the shares are valued on multiple of 23. I consider this fair for the earnings growth. Not only this, but the price-to-net-asset-value is only 0.9, which I view as cheap relative to Warehouse REIT’s high-quality property portfolio.

One thing to bare in mind about REITs is the occupancy rate. Currently, Warehouse REIT’s occupancy rate is high at 94.6%. But it still means over 5% of the property portfolio is untenanted. If this occupancy rate declines, then the profits will certainly fall.  

Overall, though, I think this is a quality AIM share to add to my portfolio today.

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High-yielding share

As I recently pointed out, mining giant Rio Tinto (LSE: RIO) is a FTSE 100 share with a dividend yield of over 6%. When I’ve filtered for quality dividends, it comes up alongside only three other investments based on my criteria. For background, my criteria were: dividend cover of more than 1.5 times; five-year EPS compound annual growth rate (CAGR) of more than 15%; return on capital employed (ROCE) of more than 10%, dividend per share CAGR of more than 9% and a price-to-earnings (P/E) ratio of 0.8 or under.

The fact that Rio Tinto came up after this screening, could indicate it’s a passive income share worth adding to my portfolio. It could do well if iron ore prices recover, which is a significant part of its income.

On the flip side more money going into ESG investing, (investments with solid environmental, social and governance records), could hold back the share prices of miners. The price of iron ore is also beyond its control and could continue to fall, this would very likely hit the share price. 

Two dividend growth shares

When it comes to passive income I also want to see very sustainable dividends. There are two dividends I think have room to grow for many years to come because there’s a high level of dividend cover, reasonable dividend growth and a business model that should support earnings growth. They come from Sureserve (LSE: SUR) and GB Group (LSE: GBG).

The former is a property services group. It should benefit from the growth of smart meters and the drive to make buildings greener.

Dividend cover is over four, showing there’s plenty of room for bigger dividends in the future. This is part of what makes it a top passive income idea from my perspective. 

In summer 2020, the group paid off all its borrowings, putting it on a much better financial footing. That should also help more earnings filter through to dividends because less money goes towards repaying loans.

However, Sureserve is a pretty low-margin business and its work can be replicated by other groups, so it does not have much of a competitive moat. I think these risks are partially offset by its size and the large contracts it has with social housing groups.  I’m keen to add more shares to my portfolio.  

Technology group GB Group is another dividend growth passive income idea that I like. As with Sureserve, it also has dividend cover of around four. Dividend per share CAGR has been 34% over the last three years, which is good. The payout ratio is only 25% meaning the business is reinvesting well for future growth and not paying out too much money as income.

As with any tech stock, there’s a risk its technology gets out-innovated and competitors steal market share. Also, earnings per share growth have taken a hit recently. But I back GB Group to get back in the groove. I’m tempted to add it to my own portfolio for sustainable passive income. For me, it’s a top passive income idea, when it comes to getting dividends from UK shares. 

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