As a result, some are starting to look very cheap. Time to consider buying?

A sector in focus

First up is Pollen Street Group (LSE:POLN). The alternative investment manager has seen the share price fall 18% in the past month alone. But over the past year, it’s still up 5%.

The move lower is partly due to concern about private equity and private credit funds. Given the volatility in the markets right now, people are a bit scared about private markets where liquidity isn’t that high. What I mean is that it’s harder to sell a holding in a private company or recoup a private loan than if it were publicly listed.

However, I don’t see this as being a fundamental problem for the long term. Pollen Street’s continuing to outperform in its investment strategies. The latest company update from November showed total assets under management reached £6.7bn, up 32% from the same time period last year.

With a price-to-earnings ratio of 9.54, the short-term move lower has pushed the stock to cheap levels. It’s well below the FTSE 250 average ratio.

What makes it look seriously undervalued is the fact that the drop over the past month doesn’t match the company’s growth trajectory. As a result, it appears to me this dip’s being driven more by general investor fear than by anything more serious. Of course, the risk is that the fear compounds, which could result in the next earnings report detailing a fall in assets under management and therefore impacting profitability.

Rebuilding brand reputation

Next up is WH Smith (LSE:SMWH). The stock’s down 15% in the past month, bringing the total fall over the last year to 45%.

It’s true that the move lower in the past week has been driven by concerns in the Middle East. A trading update from last week spoke about how they are mindful of “the impact that this is having on passenger numbers across our key markets”. Further, the broader move over the last year speaks to accounting problems that surfaced last August. This remains an ongoing reputational risk.

Yet the drop in the past week has pushed the stock down to the lowest level in well over a decade. When I take a step back, I think this makes the stock look very cheap.

I don’t expect the conflict in the Middle East to last long. This should act to minimise the revenue hit for the company. Is profitability going to fall by 15% because of a conflict that has existed for a couple of weeks? I don’t think so, which makes the share price move of 15% seem a little overdone.

Further, the bulk of the crash from last summer wasn’t due to business deterioration but a financial reporting issue. If the company can move on from this and show more controls are in place, the stock should be able to recover. As a result, I think both Pollen Street and WH Smith are worth considering as potentially cheap purchases right now.

The post These 2 UK stocks just got insanely cheap appeared first on The Twelfth Magpie.

Gold

One of the main reasons investors are seeking exposure to alternatives today is diversification. With these investments, one can potentially create more balanced portfolios and lower overall risk.

There are many different asset classes that can help with diversification. However, one that has stood the test of time is gold.

Relative to stocks and bonds, it has very different drivers. For example, as a ‘safe-haven’ asset, it often does well when there are concerns about the stability of fiat currencies or government debt.

Gaining exposure to gold in a Stocks and Shares ISA is quite easy today. All one needs is an exchange-traded product such as the iShares Physical Gold ETC or the WisdomTree Physical Gold ETC.

These products aim to match the spot price of gold bullion. In other words, if gold prices rise/fall, this fund should rise/fall in value by roughly the same amount.

Property

Another good portfolio diversifier can be property. Like gold, it often behaves differently to stocks and bonds.

One of the easiest ways to gain exposure here is via real estate investment trusts (REITs). These are companies that own property portfolios.

It’s worth noting via REITs, it’s possible to invest in all kinds of property. Some options include offices, warehouses, hospitals, shopping centres, and data centres.

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.

Private equity

It’s not just diversification that investors are seeking when they invest in alternatives, they’re also looking for return potential. And one area here that is hot is private equity (ownership interest in companies that aren’t publicly traded).

Now, to gain access to private equity, one normally has to be willing to invest a lot of money (sometimes £10m or more). But there are ways around this.

One way is to invest in listed private equity managers. These firms raise money from investors and then deploy this capital into businesses that have significant growth potential.

If their investments are successful, they take a cut of the profits. It’s a lucrative business model that can generate strong returns for shareholders over the long term.

One company in this space that I believe is worth checking out (I recently bought some shares myself) is Pollen Street (LSE: POLN). It’s a small UK alternatives manager that offers both private equity and private debt solutions.

I think its private equity portfolio looks quite interesting. Today, the firm is invested in a range of innovative companies in industries such as electronic payments, wealth, tech-enabled services, and lending.

An example of a company it has invested in is OrderYOYO. This is a leading provider of payments-enabled ecommerce solutions to the European restaurant sector that is used by more than 10,000 restaurants today.

Of course, companies like Pollen have their risks. They may make bad investments, or face challenging financial conditions where they can’t sell their portfolio holdings.

I think considering a little bit of exposure to this area of the market could pay off in the long run though. In the years ahead, I expect this industry to boom.

The post How to add alternative investments like gold, private equity, and property to a Stocks and Shares ISA appeared first on The Twelfth Magpie.

Here, I’m going to highlight three stocks in the index that appear to have the potential to generate both significant gains and income in the years ahead. In my view, all three are worth considering as long-term investments today.

A play on market volatility

First up, we have IG Group (LSE: IGG). It’s a provider of retail investment and trading platforms.

With the world’s financial markets continually experiencing bouts of volatility, this company has quite a bit of momentum right now. Recently, it reported a 12% increase in net trading revenue for the year ended 31 May 2025.

This doesn’t seem to be reflected in the company’s valuation, however. Currently, IG sports a price-to-earnings (P/E) ratio of just 10.3, which is really low relative to the growth.

Add in the fact that there’s a dividend yield of about 4.3% here, and I reckon there’s potential for attractive returns in the years ahead. Competition from rivals such as Trading 212 and eToro is a risk. However, weighing everything up, I like the set-up.

A niche financials play

Sticking with the financials sector, I also like the look of Pollen Street (LSE: POLN). I’ve been buying some shares in this company myself recently.

Pollen Street is an alternative investment manager that specialises in private equity and private credit solutions. And it’s growing at a rapid rate.

Last week, the company posted a 35% increase in assets under management for the first half of 2025. Management fees were up 79% year on year to £37.9m while earnings per share were up 25% to 46p.

Again though, this momentum doesn’t seem to be reflected in the valuation. At present, Pollen Street trades on a P/E ratio of just 11.6.

That’s a really attractive valuation, to my mind. What’s also attractive is the dividend yield, which currently stands at about 6%.

Of course, with this kind of company, a meltdown in the financial markets is a risk. Taking a five-year view, however, I see a lot of potential.

A leader in tech solutions

Finally, check out Computacenter (LSE: CCC). It’s a leading global provider of IT solutions.

I see this company as a good ‘picks-and-shovels’ play on the tech boom. In the same way that those selling picks and shovels made a killing in the gold rush, this company should do well as businesses move to adopt technologies such as cloud computing, AI, and cybersecurity.

Note that this year, analysts expect the company’s revenue to rise about 10%. That’s a healthy level of top-line growth.

This stock currently trades on a P/E ratio of 14.3. That valuation seems very reasonable to me.

The yield is about 3%, so there’s potential for a decent amount of income too. Note that dividend coverage is very strong so we could see the payout increased over time.

Naturally, a slowdown in IT spending is a risk. Yet, with the world in the midst of a powerful digital revolution, I think this company is well placed for long-term growth.

The post 3 magnificent FTSE 250 stocks to consider for growth and dividends appeared first on The Twelfth Magpie.

Just recently, I added a stock in the FTSE 250 to my portfolio. This company looks undervalued to me, and I see the potential for returns of 40% or more over the next year to 18 months.

An under-the-radar gem

The stock I bought was Pollen Street Group (LSE: POLN). It’s a £540m market cap alternative investment manager that offers private equity and private debt strategies.

I paid around £8.90 for each of my shares in this company. Also note that I started with a small position as I like to average into stocks over time to minimise bad timing risk.

Demand for alternatives is high

I’ll get into the numbers in a minute but first I want to highlight two key factors that drew me to this stock. One was the high demand for alternative investment strategies today.

Right now, sophisticated investors such as wealth management firms, family offices, and high-net-worth individuals can’t get enough exposure to the private markets. In an effort to diversify their portfolios (and generate higher returns), they’re all scrambling to get into private equity and private debt, so Pollen Street seems to be in the right place at the right time.

Another thing that stood out to me here was the focus of Pollen’s private equity investments. Today, it’s invested in a range of innovative companies in industries such as electronic payments, wealth, insurance, tech-enabled services, and lending.

An example of a company it’s invested in is bunq. It’s the second largest neobank in the EU (with around 17m users) and the only player serving both consumers and businesses.

Undervalued today

Turning to the numbers, Pollen shares look undervalued to me. Last year, earnings per share came in at 78.8p. So, at today’s share price of £8.92, we’re looking at a price-to-earnings (P/E) ratio of 11.3. That seems low when you consider that last year, total fee-paying assets under management rose 17% (to £4bn) and earnings per share rose 27%.

I reckon this stock could potentially command a P/E ratio of 15. If the earnings multiple ratio was to rise to that level, we could be looking at share price gains of 33%.

Dividends too

It gets better though. Because this stock also pays a substantial dividend. For 2024, the dividend was 53.6p per share. Assuming we get another dividend of that size for 2025 (and we may not), the yield would be about 6%.

Add that to the 33% and we’re looking at total returns of 39%. And that’s before any earnings growth or dividend growth.

Worth a look

Now, there’s no guarantee that this stock will generate these kinds of attractive returns, of course. The financial services industry can be volatile at times and companies like this can have their ups and downs.

Taking a long-term view, however, I see a lot of potential. In my view, this FTSE 250 stock is worth a look today.

The post Prediction: this FTSE 250 dividend stock could return almost 40% over the next 12-18 months appeared first on The Twelfth Magpie.

However, analysts see far more potential in these three stocks…

An undervalued blue-chip stock

In the large-cap space, analysts are very bullish on shares in London Stock Exchange Group (LSE: LSEG). Currently, the average price target here is 12,739p – 35% above the current share price.

The bullish stance here makes sense to me (I’m invested in this company). Today, LSEG’s one of the world’s leading providers of financial data to banks and investment managers.

However, right now, this isn’t reflected in its share price. Currently, the company’s trading on a price-to-earnings (P/E) ratio of just 21 using the 2026 earnings forecast, which is a low valuation for a software company with recurring revenues and a blue-chip institutional client base.

Now, there’s no guarantee analysts’ price target will be hit, of course. Especially if near-term growth’s weaker than expected.

I believe there’s value on offer here however. I’ve been buying the stock recently and I think it’s worth a look.

Potential for gains and income

In the FTSE 250, Pollen Street‘s (LSE:POLN) a stock analysts like. It’s a fast-growing alternative investment manager that offers private equity and private credit strategies.

The average price target here is 1,051p. That’s about 25% above the current share price, signalling that analysts see strong returns ahead in the medium term.

It gets better though. At present, this stock has a 6.6% dividend yield, so it could be a cash cow too.

I think this stock looks really interesting right now and is worth checking out. The alternative investment industry is growing at break-neck speed today yet this stock can still be picked up on a P/E ratio of 10.7 with a yield of 6.6% – what a deal.

Of course, some kind of freeze-up in the financial markets is a risk in the short term. Taking a long-term view however, I see a lot of potential and think it’s worth further research.

A scalable small-cap company

In the small-cap arena, analysts expect Keystone Law (LSE: KEYS) to do well. It’s a law firm that operates a scalable platform model in which lawyers can work remotely.

The average price target here is 795p. That’s about 33% above the current share price.

I think 795p’s achievable in the medium term as this company’s growing at a healthy rate and the valuation isn’t high. But a lot will depend on the UK economy as the legal industry is quite cyclical in nature.

If the economy rolls over, this stock could underperform. That said, if the economy experiences a period of weakness, Lloyds – which is often viewed as a proxy for the UK economy – is likely to underperform as well.

I like the scalable nature of this company however, and believe it’s worth considering as a long-term investment. It’s also worth noting that this stock has a yield of about 3.4%. So it offers potential for income too.

The post These 3 UK stocks will smash Lloyds shares over the next year, according to City analysts appeared first on The Twelfth Magpie.

Is Rolls-Royce about to run out of steam?

While Rolls-Royce shares clearly still have momentum at the moment (they’re up about 65% this year), analysts don’t see much potential for gains from here.

In fact, looking at the consensus share price target, it seems analysts expect the stock to fall. Currently, the average price target is 876p – about 10% below the current share price.

Big returns in the FTSE 250?

It’s a very different story for FTSE 250 stock Pollen Street (LSE: POLN) though. Here, the average price target is 1,051p.

That’s approximately 31% above the current share price of 800p. In other words, analysts reckon this stock is going to rip.

I can see why the City likes this stock. Pollen Street is an investment company that specialises in alternative investments (private equity and private credit). And right now, this area of the investment world is hot. Today, high-net-worth investors can’t get enough of these asset classes in their portfolios.

Meanwhile, activity in the capital markets is picking up. This is creating more opportunities for firms like Pollen Street. And lower interest rates could potentially give activity a further boost. Lower rates can make it cheaper to borrow and also make it easier to sell portfolio companies.

A low valuation and high dividend yield

As for the valuation, it looks very attractive. Currently, Pollen Street has a forward-looking price-to-earnings (P/E) ratio of just 10. That’s far lower than the valuation on some other alternative investment stocks. US giant Apollo Global Management, for example, currently has a P/E ratio of about 20.

Finally, it’s worth mentioning dividends because this stock appears to be a cash cow. For the 2025 financial year, analysts expect a payout of 55.4p per share. At today’s share price of 800p, that translates to a yield of almost 7%. Add that to the projected share price gains (31%) and investors could be looking at a total return of about 38%.

Worth a look?

Now, there’s no guarantee that this stock will provide attractive returns from here, of course. Often, analysts’ forecasts turn out to be completely wrong.

One risk with this company is an economic downturn and a freeze-up in the capital markets. This could create challenging conditions for Pollen Street and other alternatives firms.

But I think it has a lot of appeal and is worth considering today. Given the low valuation, I can see this stock outperforming Rolls-Royce shares over the next 12 months.

The post This FTSE 250 stock will smash Rolls-Royce shares over the next year, according to City analysts appeared first on The Twelfth Magpie.

Since the turn of the century, our midcap index has soared by around 250%, more than five times the modest gains of the main index over the same period. 

That’s largely because the FTSE 250, which holds many medium-sized companies, tends to have a bigger bias toward domestic UK businesses and higher-growth sectors.

As the UK economy slowly steadies after years of uncertainty, I reckon this index could shine again in the decade ahead. 

Here are two compelling examples of mid-cap stocks that illustrate the hidden potential on offer.

An investment firm with income potential

Pollen Street (LSE: POLN) is an independent alternative investment manager. It specialises in private equity and credit, with a proven strategy that’s delivered solid growth.

For income investors, it’s especially attractive. The shares currently offer a chunky 6.8% dividend yield, with a comfortable payout ratio of 68%. Better still, Pollen Street has paid dividends for nine straight years.

The valuation also looks compelling. The shares trade on a low price-to-earnings (P/E) ratio of just 10 and a price-to-book (P/B) ratio of 0.84 – suggesting its intrinsic value outshines the price.

My only concern would be its heavy reliance on private credit and equity markets — any sharp downturn in these areas could squeeze performance fees. There’s also the threat that tighter regulation of alternative asset managers could pressure margins in future.

But financially, the company looks to be in a healthy position. Revenue stands at nearly £100m, with earnings up 25% year on year. Plus, it boasts a low debt-to-equity ratio of 0.33, alongside £157m in operating cash flow.

The trading platform that’s taking off!

Next is Plus500 (LSE: PLUS), a global online trading platform that’s enjoyed a strong rebound. Its shares are up 47% over the past year, helped by an impressive second quarter in 2025 when revenue climbed 15%. Management is confident about its full-year targets.

It’s another attractive pick for passive income. Plus500 yields 5.2%, with a sustainable payout ratio of 61.8%. Impressively, dividends have grown 30% year on year, and the company has lifted its payout for 12 consecutive years.

Valuation-wise, the shares aren’t overly stretched at 12.2 times earnings, although the P/B ratio of 4.8 is on the high side. However, that premium comes alongside stunning profitability: an operating margin of nearly 44%, a net margin above 35%, and a sky-high return on equity of 40%.

Risks? The biggest is its dependence on retail trading volumes, which can dry up quickly if market volatility subsides. Plus, regulatory crackdowns on leveraged trading could hurt future revenues.

Fortunately, it has a rock-solid balance sheet, with negligible debt of £12.6m versus £514m in equity and almost £800m in assets.

For me, these two stocks underline why investors might want to look beyond Footsie blue chips. The FTSE 250 has long outperformed its bigger sibling, and with under-the-radar opportunities like these, I suspect it could do so again in the decade ahead. 

For those seeking growth, value and reliable income, there’s still plenty of untapped potential on offer.

The post Why I think the FTSE 250 could outperform the FTSE 100 this decade appeared first on The Twelfth Magpie.