That’s comfortably ahead of its long-run historical average of 8%. And for a passive investor who put £1,000 into a low-cost index tracker fund back in May 2021, is now sitting on roughly £1,768.

Such strong gains deserve to be celebrated. But this performance still pales in comparison to the enormous gains some individual FTSE 100 stocks have achieved over the same period.

So how much money have stock pickers made?

When stock picking changes everything

Over the last five years, Airtel Africa (LSE:AAF) has stood out as a leading winner.

The Sub-Saharan telecoms and mobile money group has delivered a staggering 371.1% return, including dividends, since May 2021. Just to put this into perspective, that’s the equivalent of an average of 36.3% a year, enough to transform a £1,000 initial investment into £4,711!

What’s behind this phenomenal run? The main catalyst behind Airtel’s success ultimately boils down to explosive structural growth. Smartphone penetration across the African markets was low, and the unbanked population was enormous.

But with household income rising across the region, demand for mobile data and digital payment solutions has surged. And with Airtel having already embedded itself at the heart of Africa’s telecommunications infrastructure, the company was seemingly perfectly positioned to capitalise on this tailwind.

The result? In its latest 2026 fiscal year (ending in March), revenue jumped 29.5%, operating profits charged ahead by 45.1%, and earnings per share (EPS) skyrocketed by 212.2%!

With that in mind, it’s no wonder that the FTSE 100 stock took off. But now the question is, can it do it again?

What does the next five years look like?

Even with such impressive growth already under its belt, the bull case remains structurally compelling.

Mobile money transaction values are still accelerating, with annualised volumes now reaching $145bn across its platform. And with its core telecoms business steadily expanding, institutional forecasts show EPS potentially almost doubling from 18.6 cents to as high as 36 cents by March 2028.

That’s obviously exciting. But there are some important risk factors to consider. Currency depreciation of African countries continues to be a challenge, particularly in Nigeria, where adverse shifts are eroding revenues despite strong underlying operational performance.

Rising energy costs are also applying unwanted pressure to profit margins, and geopolitical instability across several of its target markets is also proving tricky to navigate.

These aren’t trivial risks. But for investors with a long-time horizon and an appetite for emerging market exposure, Airtel Africa seems to be a rare gem.

It benefits from both a genuinely large addressable market and an early-mover infrastructure advantage. And with a proven management team at the helm, the next five years look quite promising, in my eyes. That’s why I think this FTSE 100 enterprise deserves a closer look.

Should you invest £5,000 in Airtel Africa Plc right now?

When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Airtel Africa Plc made the list?

Zaven Boyrazian does not hold any positions in the companies mentioned.

The post £1,000 invested in the FTSE 100 in May 2021 is now worth… appeared first on The Twelfth Magpie.

Of course, it’s not 100% straightforward.

It takes time, dedication and often sacrificing some luxuries. But as the old saying goes: nothing worth doing comes easy.

So, how does the average investor get started?

Calculate your investment goals

First, work out your investment requirements:

• Cut down on non-essential expenses.
• Decide how much you can invest each month.
• Choose your timeline (10 years? 20 years?)
• Use UK market averages to calculate your passive income.

For example, say you can afford to invest £241 per month. Using the FTSE 100’s long-term average return of 9.5% over 20 years, that could grow to £171,257.

In the UK, it’s realistic to aim for an average dividend yield of 7%. So that pot (£171,257) would pay out around £11,988 in annual dividends — or £999 a month.

Of course, the real outcome could be less or more. These estimates just give us an idea of what to aim for.

How and where to invest

Once you have a strategy planned, decide which investment account to use.

Most people prefer the flexibility of a Stocks and Shares ISA, but retirement-focused investors may prefer a SIPP.

Both these investment accounts provide attractive tax benefits that make a huge difference to returns over multiple decades.

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.

How do the experts pick their stocks?

The real trick to making that goal a reality depends far more on how you construct the portfolio than many investors appreciate.

The key is balance and moderation. Focusing only on speculative growth stocks or high-yielders is a fast route to failure.

Equally so, being too safe means you could fall short of hitting market average returns.

For beginners, it’s common to opt for 60% growth stocks and a 40% mix of income and defensive shares. Yield chasers like myself lean more towards income, but in the early days it pays to focus on growth.

So what does that look like?

Identifying growth opportunities

One of my favourite growth stocks in recent years has been Airtel Africa (LSE: AAF). It caught my eye in late 2023, when the shares were trading at around half their estimated fair value.

At the time, profitability was strong and earnings were forecast to grow 32% per year. But the share price was undervalued because of the impact of foreign currency conversions. Nigeria’s naira was struggling, which impacted profits in GBP.

I took a chance on the shares because I identified two things: the naira was likely to stabilise, and Africa’s mobile market was booming.

Fast forward two years, and the shares are up 287%.

The bottom line

Identifying growth opportunities requires close scrutiny of broader market economics and valuation drivers.

Even today, I think Airtel Africa is still worth considering — but it’s no longer the undervalued gem it once was. The gains are now priced in, so it could suffer short-term losses if Africa’s mobile market falters.

That’s why investors occasionally rebalance their portfolios to meet changing demand. But when starting out, it pays to build a foundation of shares you’d be happy to hold for 10–20 years.

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In his 1982 letter to investment vehicle Berkshire Hathaway shareholders, he put it bluntly: “For the investor, a too-high purchase price for the stock of an excellent company can undo the effects of a subsequent decade of favourable business developments.”

Think about it. You find a brilliant company – strong profits, smart management, growing sales. But if you buy at a sky-high price, even years of good results might not make you money.

It’s like paying £50,000 for a car worth £30,000. No matter how reliable it is, you’ve overpaid from day one. 

Value investing, Buffett-style, is all about snagging quality at a bargain. Pay fair or less, and time works in your favour. Chase hype, and you’re gambling.

The current market outlook

For much of this year, UK and global stocks have felt overvalued. Oil prices spiked near $120 a barrel amid Middle East tensions, stoking inflation fears and dashing hopes for Bank of England (BoE) rate cuts.

Now, it looks like interest rates could stay high for longer, with futures showing over 40% odds of hikes this year. BoE deputy governor Sarah Breeden even provided a rare, out-of-character comment on markets last week.

She told the BBC global stock markets look overvalued, ignoring big risks like geopolitics and slowing growth. “There are numerous risks present, yet asset valuations are at unprecedented levels. We foresee an adjustment occurring eventually,” she said. 

Both the FTSE 100 and S&P 500 hover near highs, but the real economy lags. This could spell opportunity for patient buyers. If prices dip, excellent firms might trade at sensible levels – echoing Buffett’s wisdom.

Where I’m looking

One stock I plan to scoop up if prices fall is Airtel Africa (LSE: AAF). My existing shares are already one of the top performers on my portfolio but I’m wary of buying more at today’s high price. 

In late 2024, the price plunged below 100p, providing an attractive entry that rewarded well. It’s up about 266% since, thanks to Africa’s mobile boom.

Foreign currency swings have historically caused volatility, especially due to Nigeria’s naira woes. That can be risky — but also rewarding.

Here’s a quick snapshot of its recent financials:

• Return on equity (ROE): 20% — solid profitability from shareholder cash.
• Forward P/E ratio: 26 — pricey versus history, suggesting overvaluation.
• Earnings per share (EPS): up 760% year-on-year — explosive growth.
• Debt-to-equity: high at 2.63 — risky if profits falter or rates rise.

The above figures tell a clear story: Airtel Africa is a highly profitable company with strong earnings. But much of the future growth is already priced in.

A downturn could provide a more attractive entry point for long-term wins. But, of course, recovery’s never guaranteed. Currency swings and geopolitical risk remain key concerns.

Taking Buffett’s advice to heart

Buffett’s advice may be decades old but it’s just as applicable today as ever before. Following his strategy could save a novice investor from years of losses.

But when hunting growth opportunities, always aim to manage risk with diversification and a decent allocation in defensive picks. Market dips test nerves, but prepared investors grab deals without panic. Wait for value, and let time build wealth.

The post Here’s 1 action Warren Buffett repeatedly warned investors against appeared first on The Twelfth Magpie.

Personally, I’m leaning towards the former. HSBC Holdings and Barclays are topping my shopping list after falling 9% and 12% respectively last week. The biggest FTSE 100 faller was British Airways owner International Consolidated Airlines Group, which slumped 18%. But I already hold that.

Still, I’m also curious about a brace of blue-chips that have taken this week’s troubles on the chin. Could these two thriving concerns prove better opportunities?

Admiral Group shares climb

The first is general insurer Admiral Group (LSE: ADM), whose shares rose 5% over the week, making it the FTSE 100’s single biggest climber.

The stock was boosted by a strong set of full-year results on Thursday (5 March), driven by what the company called an “exceptional” performance from its UK motor division. The shares jumped 7.6% on the day as the board reported a 16% rise in pre-tax profit to a record £957.9m. Customer numbers climbed 7%.

Shareholders were rewarded too. The board increased the dividend per share 7% to 205p and declared a special dividend of 17.2p. Admiral’s already a solid income stock, with a trailing yield of around 5.2%. It doesn’t look expensive either, trading on a price-to-earnings ratio (P/E) of roughly 12.4.

However, the shares have been fairly subdued over longer periods. They’re up just 6% over the last 12 months and only 4% over five years.

Motor insurance is a cyclical and competitive market, and rivals will be gunning for Admiral after these strong results. Still, Admiral looks well worth considering, particularly for income-focused investors.

Airtel Africa also performs

The week’s second-best performer was Africa-focused telecoms group Airtel Africa (LSE: AAF). It didn’t release results last week but the shares still rose 4.7%. The Airtel Africa share price is now up 150% over the last year and an extraordinary 360% over five, making it one of the FTSE 100’s top performers.

I suspect investors see Africa as largely insulated from Middle East tensions. I’ve always viewed Airtel Africa as an aggressive growth play but now its showing its defensive qualities. Everybody wants a mobile phone today, and customers typically pay through fixed monthly contracts. That said, telecoms firms like BT Group and Vodafone have been volatile over the years.

Airtel Africa beats them both with a massive growth. During the nine months to 31 December, it reported a 28% increase in revenue and a 41% rise in operating profit. The company is also partnering with Elon Musk’s SpaceX to expand network coverage, saving it a fortune on building new infrastructure.

The firm has previously been hit by currency volatility in Nigeria, so some of its recent strong performance may be bouncing back from that. It isn’t cheap. The shares trade on a trailing P/E ratio of around 80, although that falls to roughly 21.5 on a forward basis and it may be worth a closer look.

Are these two the best? That depends on an investor’s personal goals. Both Admiral and Airtel Africa carry risks, but show FTSE 100 companies can still thrive in tricky markets. A little diversification can go a long way in days like these.

The post As markets plunge, are these the 2 best FTSE 100 stocks to buy today? appeared first on The Twelfth Magpie.

But what’s causing the African telecoms group to buck the trend? Could it be a stock to consider buying during these uncertain times? Let’s see.

On the defensive

Although Africa’s only separated from the Arabian Peninsula by the Red Sea, the continent is sufficiently far away from the epicentre of the trouble to not be a target. Also, most customers in the telecoms sector are under contract and they tend to pay fixed monthly rates. In addition, mobile phones are seen as an essential part of modern life.

Generally speaking, this means revenues and earnings in the industry tend to be reliable and reasonably predictable. That’s why the sector has defensive characteristics that can make it attractive during times of geopolitical uncertainty.

And with its rapidly growing population, I reckon Africa’s the perfect place to sell mobile communications and money services. Indeed, during the nine months ended 31 December 2025, the group reported a 28.3% increase in revenue and a 41.3% rise in operating profit.

And it’s not alone. Vodafone, its FTSE 100 cousin, reported organic service revenue growth of 13.5% on the continent during the three months to the same date. And MTN Group, Africa’s largest telecoms provider, saw its year-on-year service revenue rise by 22.6% during the nine months to 30 September 2025. It looks as though the territory’s a great place to do business at the moment.

Providing access to banking products

Interestingly, all three companies have reported that their financial services divisions are doing particularly well. And this is where I see huge potential for Airtel Africa.

In many parts of the 14 countries in which the group operates, there are no banks. Customers are therefore able to load money on to their phones — and obtain cash — via the group’s network of agents, branches, and kiosks.

In addition, it’s expanding its services to include loans, savings, and international money transfers. The group plans to separately list its mobile money division in the first half of 2026.

Pros and cons

But there are a couple of areas to keep an eye on. Despite its impressive cash generation, Airtel Africa’s net debt increased during 2025. Although, it’s now lower relative to its EBITDA (earnings before interest, tax, depreciation, and amortisation), its double-digit effective interest rate is a reminder that it’s vulnerable to higher borrowing costs.

Also, many of Africa’s currencies, economies, and governments can be unstable.

However, I think the group’s well positioned to cope with these threats. While I appreciate the defensive properties of Airtel Africa’s stock, I like it more for its growth potential. I reckon it’s operating in the right place at the right time. I believe both of its service offerings – telecoms and mobile money – are likely to become increasingly important to more and more African consumers.

And in December 2025, the group announced a partnership with SpaceX to expand its network coverage without having to invest heavily in telecoms infrastructure.

For these reasons, irrespective of what happens in the Middle East over the coming weeks, I think Airtel Africa’s a stock for long-term investors to consider.

The post Airtel Africa’s shares are up as others on the FTSE 100 plummet. What’s going on? appeared first on The Twelfth Magpie.

However, while it’s impossible to predict when the next crash will occur, there’s some evidence to suggest that market valuations are becoming stretched. But what can be done to prepare for the next big drop? Let’s take a closer look.

Getting jittery

We’ve seen in recent weeks a degree of nervousness among investors about the potential impact of artificial intelligence (AI) on software companies, data providers, and wealth managers. The possibility that cheap AI tools will reduce the scope for these businesses to charge premium prices for their services is clearly playing on people’s minds.

Indeed, the Financial Times reported on Wednesday (25 February), that “asset-heavy” stocks are becoming fashionable again. The rationale is that it’s harder to disrupt these types of businesses.

Taking two FTSE 100 companies an as example, both easyJet and Rightmove currently (27 February) have similar market-caps of over £3bn. But their latest balance sheets disclose net assets of £3.5bn and less than £100m respectively.

I can’t see AI disrupting easyJet’s business model that involves flying 355 aircraft on 1,207 routes to 164 different airports in 38 countries. However, Rightmove’s website looks vulnerable to me.

Patience is key

Another lesson of history is that even after the most severe of crashes, the market will eventually recover. It might take a decade or more – as with the Great Depression and the bursting of the dotcom bubble – but taking a long-term view is likely to yield better results than trying to time the market.

What I’m doing

With this in mind, I’ve recently taken a position in Airtel Africa (LSE:AAF). It’s invested heavily in telecoms infrastructure, which should give it some protection against newcomers.

And it’s 100% exposed to a continent that, according to the World Bank, will see its population grow by 1bn by 2050. This can only be a good thing for the group’s telecoms and mobile money services.

But Africa’s currencies can be highly volatile and its significant debt pile will become more expensive to service should interest rates rise.

However, on balance, I think Airtel Africa’s the sort of stock that could emerge relatively unscathed from a stock market crash. It’s the second largest telecoms operator on the continent and it’s active in 14 markets. And since the end of 2020, the group’s increased its customer numbers by 51%. It’s also looking to list its money business separately, which could be worth more than $4bn.

A final thought

Of course, a stock market crash could be bad news for many investors. Some may never recover the losses they suffer, especially those that have invested heavily in some pre-revenue US tech startups.

That’s why it’s important to hold a diversified portfolio with exposure to different sectors. However, a crash also presents opportunities for those with some spare cash. As billionaire investor Warren Buffett wrote in 1986: “Be fearful when others are greedy, and greedy when others are fearful“.

In other words, it could be a chance to buy some great companies at bargain prices.

The post A stock market crash is coming! Here’s what I’m doing appeared first on The Twelfth Magpie.

To showcase this variety, here are three Footsie firms that are taking market share from rivals in their respective industries.

Supermarket giant

Let’s start with the largest, which is Tesco (LSE:TSCO). The share price has jumped roughly 85% since early 2023, which is a cracking result when dividends are also factored into the equation.

A key reason behind this has been the company’s incremental market share gains. In its recent Q3 and Christmas trading statement, Tesco said it had a near-29% market share in the UK.

This was its highest share for over a decade.

Supporting this is the powerful Clubcard, which keeps customers loyal, and its successful Aldi Price Match campaign. The latter seems to have neutralised the competitive threat from the German budget chain.

Tesco owns an even larger slice of the online grocery market, with its delivery service increasingly popular with consumers. Online sales growth was 11.2% over the 19 weeks to 3 January, including extended Christmas Eve deliveries.

Finally, its Finest range, which grew 13% over this period, continues to gain popularity. More cash-strapped shoppers are dining at home rather than in restaurants to help save money.

High street stalwart

Next is, well, Next (LSE:NXT). The company is defying the gloom among UK retailers with robust growth, which is reflected in a share price surge of 44% over the past year.

In the nine weeks to 27 December, full price sales rose 10.6%, with UK sales up 5.9%. That was both ahead of company expectations and the wider UK retail sector. 

However, international is now a big part of the company’s growth story, with a 38.3% rise in sales over the period. Next plugged into Zalando’s logistics-as-a-service arm (ZEOS) last year. This has improved stock availability across Europe and improved efficiency. 

Heading to Africa

Last but certainly not least is Airtel Africa (LSE:AAF), whose share price has skyrocketed 215% over the last 12 months!

The telecommunications firm operates in 14 sub-Saharan countries, where a young population and accelerating smartphone adoption are supporting super-strong growth.

Next year, earnings are expected to surge 44%.

In the six months to 30 September, Airtel Africa’s total customer base increased 11% to 173.8m. And 78.1m of these are using the internet on their phones, which is important because these customers are also more likely to use the firm’s mobile money service (Airtel Money).

This unit is gaining ground on larger rivals. In Kenya, for example, Airtel Money’s market share has hit 10%, up from less than 3% in 2023.

Which do I prefer?

Naturally, all three stocks carry risks. Tesco has warned that some customers are “counting every penny“, so 2026 could be tough going.

Next is saying something similar, guiding for slower full-year sales growth of approximately 4.5%. Meanwhile, the stock looks quite pricey at 18.3 times forward earnings.

Finally, Airtel Africa faces regulatory risk across its markets, as well as swings in local currencies that can impact earnings.

However, I like Airtel’s potential long term, as it taps into a young and rapidly growing African population, low smartphone penetration and a massive unbanked population. I think this stock is worth digging into.

The post 3 top FTSE 100 stocks taking market share appeared first on The Twelfth Magpie.

I doubt whether it will make the top 10 in 2026, but the group has a recent history of proving sceptics wrong.

Similarly, Barclays and Standard Chartered appear again having been placed fifth and ninth respectively in 2024. They are joined by a third bank, Lloyds Banking Group, whose shares closed 2025 a fraction below the psychologically important — although largely meaningless — 100p barrier.

Another financial institution, Prudential, was the eighth-best performer helped by an improved economic situation in China, and Asia in general. The lesson from April 2025 is that much will depend on President Trump’s US trade policy. These four stocks are particularly sensitive to the fortunes of the economies of the biggest markets in which they operate.    

Given soaring gold (up 63%), silver (42% higher), and copper (a 41% gain) prices in 2025, it’s no surprise that miners Fresnillo, Endeavour Mining and Antofagasta did well. With so much uncertainty surrounding commodity prices, it’s impossible to know how these stocks will perform in 2026. However, the consensus of economists appears to be that metals prices will remain above historical levels.

The shares of Babcock International Group were helped by the UK (and other NATO members) pledging to spend significantly more on defence between now and 2035. The group’s likely to continue to be one of the beneficiaries of the dangerous world in which we live.

And finally…

The last member of the top 10 is Airtel Africa. And it’s one that I think’s worth considering for 2026.

That’s because the biggest problem for most businesses is finding new customers. But the telecoms group operates in 14 countries on a continent that the United Nations says will double its population by 2070.

In particular, the group has a significant presence in Nigeria, which is forecast to become the world’s third most populous country by 2050, and the Democratic Republic of Congo, which has Africa’s highest growth rate.

And what do young people seem to want more than anything else? Yes, a mobile phone.

But Airtel Africa also provides a mobile money service. Using a smartphone is the only way the vast majority of people in sub-Sharan Africa have access to banking services. The group’s expected to spin off this division in the first half of 2026.

However, operating in the region has its challenges. Political instability could affect the regulatory regime in key markets. And economic volatility can lead to wild currency fluctuations. Also, telecoms infrastructure isn’t cheap.

Despite these risks, the group’s expected to continue to grow rapidly. By the year ending 31 March 2028 (FY28), the consensus of analysts is for revenue to grow by 60% compared to FY24. Over the same period, EBITDA (earnings before interest, tax, depreciation, and amortisation), and free cash flow are forecast to be 72% and 85% higher respectively.    

Although I doubt Airtel Africa’s share price will do as well in 2026 as it did in 2025, I think it will outperform the wider FTSE 100. On this basis, I reckon it’s worth considering.

The post Will the FTSE 100’s top 10 performers in 2025 continue their success in 2026? appeared first on The Twelfth Magpie.

Growth of around 19% so far this year for the FTSE 100 also looks impressive and I think it is. However, it pales by comparison to the individual performance of some of its members.

For example, Airtel Africa (LSE: AAF) has gone up by 184% since the start of the year.

Why has the share almost tripled in a little under 12 months – and could its strong positive momentum perhaps carry over into the new year?

A business riding growing trends

Part of why this FTSE 100 share has shone this year is its focus on markets that have large growth opportunity and the firm’s proven ability to tap into that.

Specifically, Airtel Africa has a large business in several key African markets where demographics are on its side due to population growth and increasing mobile phone usage. Selling voice and data has been a good business. Building on that, getting into digital currency is both a logical step and a potentially lucrative one.

This year I think the wider stock market woke up to just how powerful this story could be. In the first half, revenues jumped 26% year-on-year. Profit before tax jumped no less than 375%.

The biggest revenue growth rate came from data, at 37%. For the first time it surpassed voice as a revenue generator. But mobile money also grew strongly, with revenues up 30% year-on-year.

By building a strong presence in multiple large African markets, Airtel Africa has laid the groundwork to ride demographic trends that play to its advantage as well as ramping up its mobile money offering.

Could 2026 be a good one for Airtel Africa?

Following the strong run this year, the FTSE 100 share now sells for 34 times earnings. That may seem expensive. But bear in mind the strong earnings growth the business reported in the first half of this year. If Airtel Africa can keep improving its performance strongly, the prospective price-to-earnings ratio may be markedly lower than 34.

However, there are also risks here. Airtel Africa’s net debt has been growing, standing at $5.5bn at the end of the first half. That is higher than I would like and I expect that, over time, it could get higher still. Building and maintaining mobile telephony infrastructure is a costly business.

Operating in Africa can also bring substantial operational risks. We have already seen how swings in the Nigerian currency can make business very challenging for Airtel Africa over the past several years. The company managed to take that in its stride, but as I see it the risk remains noteworthy.

Such risks could hurt the share price. However, if earnings continue to grow at a very strong rate I can imagine the Airtel Africa share price moving up over time. From a long-term perspective, I see it as a share for investors to consider.

The post Up 184% this year, what might this FTSE 100 share do in 2026? appeared first on The Twelfth Magpie.

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.

The post Every pound I invested in this FTSE 100 growth stock last year is now worth £3 appeared first on The Twelfth Magpie.