Image source: Getty Images
With UK stocks coming back into fashion at the moment, it’s tempting to think that the best opportunities have been missed. But city experts think there are two stocks with the biggest growth potential over the next year or so.
It’s not possible? Let’s try to find out.
A gift?
Card Industry (LSE:CARD) is a common sight on the UK high street. But in December 2025, the card and gift retailer issued a profit warning. Even though the group has placed itself at the lower end of the market value, it does not seem to have escaped the impact of declining disposable income. High employment costs, stubborn inflation and intense competition didn’t help either.
But analysts think that the group’s current (February 11) 57% share is insignificant. And with a forward price-to-earnings (P/E) ratio of just 5.7, I can see why they might hold this view. The stock also offers an attractive dividend. Based on prices paid over the past 12 months, it yields 6.7%. Of course, given the profit warning, it is possible that this could be discontinued. And the group has a very short history of paying dividends, so the past is not a good guide here.
To try to get more profit, the group designs, produces, distributes and sells its own cards. It also says this helps us react quickly to changing preferences.
But the business feels old fashioned to me. It recently bought Funky Pigeon to improve its online offering but sending cards sounds like a thing of the past.
The stock is one of the most volatile in the area. With a five-year beta of 3.1, it means that if the stock market goes up (or down) by 10%, Card Factory’s share price will change, on average, by 31%.
Despite its attractive valuation and impressive 12-month share price targets, I think there are better opportunities to consider elsewhere, in markets with healthy long-term growth prospects.
Like?
Another example is this Gamma Communications (LSE: NAME).
As the world moves from copper phone lines to cloud-based communications, the telco is likely to be one of the biggest beneficiaries. Its Unified Communications as a Service (UCaaS) offering is available in the UK, Netherlands, Spain, and Germany.
Analysts think its shares are undervalued by 67%. With a P/E ratio of only 9.6, there is strong evidence to support this theory. And as an added bonus, the group also pays a small dividend. The stock currently yields 2.3%.
But the group’s profits have been affected by a lack of economic growth and a loss of confidence among its target customer base of small and medium-sized businesses. Also, there is a lot of competition out there.
And the UK’s plans to close the Public Switch Telephone Network (PSTN) as early as 2027, are a double-edged sword. Some customers are moving to fiber solutions as a cheaper alternative to UCaaS. Although Gamma offers this service, it earns a lower margin than on its cloud offering.
However, it works in an industry where the path is clear. Of course, the PSTN shutdown may be delayed (it has happened before) but, eventually, everything will be in the cloud.
I think the recent pullback in the group’s share price – down 33% since February 2025 – could be a good buying opportunity. I think Gamma Communications is a stock worth considering.
