Image source: M&S Group plc
With thousands of growth stocks in the world to choose from, it can be difficult for time-poor investors to know which ones to choose. But institutional investors spend their working days looking for profitable opportunities. Here are two City professionals who have flagged off 2026.
Simply M&S
Berenberg bank rating analysts Marks & Spencer (LSE:MKS) as a buy. Also, Hargreaves Lansdown has put the seller on it Five Stocks to Watch 2026 list.
The group’s finances took a major hit in April 2025, when it was hit by a cyber attack. Some estimates think it cost the club closer to £300m. And because of this, I’m sure it won’t happen again, certainly in the next few years. I think the group directors will be taking all the security measures – and engaging the best in the IT security business – to make the vendor’s systems as secure as possible.
Analysts have a 12-month target price of about 20% above today’s (20 January) share price. Based on Berenberg’s March 2027 forecast, it says the stock currently trades at just 10 times earnings.
A wonderful prediction
Another prediction that I find very interesting is that by 2027, Marks & Spencer stock may produce 3%-4%. When I first saw this, I have to admit I raised one of my eyebrows. After all, based on the prices paid in the last 12 months, their yield is 1%. However, a quick look back at history confirms that in the late 2010s, it was an excellent dividend payer. I agree that there is plenty of scope for its payout to be increased further, if revenue can continue to grow. In the financial year of March 2025, its dividends were equal to only 11% of earnings per share (EPS).
But selling is difficult, especially on the high street. Business pricing puts the group at a competitive disadvantage against online rivals that don’t have brick-and-mortar stores. And as the business knows all too well, clothes can quickly fall out of fashion.
However, group food continues to grow rapidly and joint ventures Ocado is the UK’s fastest growing grocery business. I think the British icon will go back a long way. Its fashion, home, and beauty category is still recovering from the attack and I see no reason why this trend cannot continue. On balance, I think Marks & Spencer is a long-term growth stock worth considering.
Another option
Berenberg analysts have had a good start to the year. As well as revising Marks & Spencer’s prospects, they have also improved Vodafone (LSE:VOD) from Hold to Buy. They have a new target price of 119p, which is 19% higher than the communications group’s current share price.
The business still faces some challenges. It continues to lose customers in Germany and is under constant pressure to raise money for expensive infrastructure.
However, it is doing well in Africa. And operational savings are expected from the merger of UK and Three operations. Analysts expect a 44% improvement in adjusted EPS over the next three years. It has also increased its interim dividend and will come to the end of a £500m share buyback programme.
Personally, I think there are early signs of recovery. On this basis, I feel the stock is worth considering.
