Top UK mid-cap stocks to watch for 2025
From bakery chains to insurers, these five FTSE 250 companies show promising growth potential. Here's our analysis of the UK's standout mid-cap performers.
Why consider UK mid-cap stocks?
UK mid-cap stocks can offer significant growth potential while maintaining more stability than smaller companies. These firms often have established market positions but still retain room for expansion.
The FTSE 250 has historically outperformed the FTSE 100 over longer periods, demonstrating the growth potential of mid-sized companies. This segment often includes market leaders in specialist sectors.
Mid-caps frequently become acquisition targets for larger companies, potentially leading to share price premiums. They also tend to have more domestic focus than FTSE 100 firms, offering better exposure to the UK economy.
These companies typically have strong enough balance sheets to weather economic challenges while maintaining the agility to adapt to changing market conditions.
Greggs plc (GRG) - Expanding beyond traditional bakery
Greggs has transformed from a local bakery into a national food-on-the-go retailer, with its shares showing impressive momentum throughout 2023.
The company's expansion plans target over 3,000 locations by 2026, representing significant growth potential from its current 2,473 stores. This aggressive rollout strategy focuses on prime locations and evening trading.
Strategic initiatives including digital ordering, delivery partnerships, and healthier menu options have broadened its customer base. The company's value proposition remains particularly attractive during cost-of-living pressures.
A special dividend of 40p per share demonstrates management's confidence in sustainable growth and commitment to shareholder returns.
easyJet plc (EZJ) - Recovery and reinvention
The easyJet airline has emerged stronger from the Covid-19 pandemic, with record second-half profits in 2023 indicating successful strategic positioning in the European aviation market.
Management's decision to resume dividend payments signals confidence in sustainable profitability, with an initial 4.5p per share planned for early 2025. This represents a significant milestone in the company's recovery.
EasyJet's focus on primary airports and leisure routes has proven effective, with advanced bookings for 2024 showing robust demand. The airline continues to modernise its fleet for better efficiency.
Cost management initiatives and strategic route planning have strengthened the company's competitive position against both legacy carriers and low-cost rivals.
Bytes Technology Group plc (BYIT) - Riding the digital transformation wave
Bytes Technology has capitalised on the acceleration of digital transformation across industries, reflected in its impressive 50% share price gain in 2023.
The company's diverse client base spans public and private sectors, providing resilience against sector-specific downturns. Its focus on high-margin services, including cybersecurity and cloud computing, supports profitability.
Strong recurring revenue from software licensing and IT services provides stable cash flow. The company maintains high customer retention rates through excellent service delivery.
Growth opportunities remain substantial as organizations continue to invest in digital infrastructure and cybersecurity solutions.
Beazley plc (BEZ) - Capitalizing on insurance market dynamics
Beazley specialist insurance focus has proven particularly valuable as cyber risks and environmental concerns drive demand for sophisticated coverage solutions.
The 29% increase in gross premiums written to $3.2 billion reflects both market rate improvements and successful expansion into new risk categories. This growth demonstrates the company's ability to identify and capitalise on emerging risks.
Strong underwriting discipline and risk management expertise have helped maintain profitability despite challenging market conditions. The company's innovative approach to new products sets it apart from competitors.
The growing importance of cyber insurance and specialty coverage suggests continued growth potential, particularly as businesses face evolving threats.
Balfour Beatty plc (BBY) - Building on infrastructure opportunities
With over £100 billion in potential UK infrastructure projects, Balfour Beatty is well-positioned to benefit from government spending commitments. The company's expertise in large-scale projects provides competitive advantages.
Investment in infrastructure remains a priority for both public and private sectors, supporting a robust project pipeline. The company's order book reflects this positive outlook.
Focus on operational efficiency and selective bidding has improved profit margins. Environmental and social governance considerations are increasingly integrated into project delivery.
Strong cash generation supports both reinvestment in the business and shareholder returns through dividends and buybacks.
How to invest in mid-cap stocks
- Research thoroughly using financial statements, market analysis, and industry trends before making investment decisions. Consider opening a share dealing account.
- Determine your investment strategy, whether buying for dividends, growth, or both. You might want to explore index funds for broader exposure.
- Consider starting with a demo account to practice without risking real money.
- Decide between regular investments or lump sums. Our guide to share investing can help you choose.
- Monitor your investments regularly and rebalance your portfolio when necessary.
Risks to consider
Mid-cap stocks can experience greater price volatility than larger companies. Market conditions and company-specific factors can significantly impact share prices.
Economic uncertainties, including inflation and interest rate changes, may affect different sectors differently. Always consider your risk tolerance and investment timeline.
Liquidity can be lower than with FTSE 100 stocks, potentially affecting your ability to buy or sell quickly at desired prices.
Remember to diversify your portfolio to spread risk across different sectors and company sizes.
Summary and outlook
These five mid-cap stocks represent diverse opportunities across different sectors of the UK economy. Each company shows strong fundamentals and growth potential.
Consider your investment goals and risk tolerance when selecting stocks. A balanced approach to portfolio construction remains important.
Regular monitoring of company performance and market conditions helps inform investment decisions. Stay informed about sector-specific developments that could affect these stocks.
Remember that past performance doesn't guarantee future returns. Always conduct thorough research before making investment decisions.
This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
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