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Meet the UK growth stock that analysts say can turn £2,000 into £3,085
Global stock markets have had a good run since April. As a result, a lot of growth stocks now look fully valued. There's still value to be found in this area of the market however, if we peak beneath the surface. Here's a look at a UK growth stock that City analysts believe could turn £2k into more than £3k over the next 12 months, or so. An under-the-radar FTSE 250 stock The stock I'm going to zoom in on today is Gamma Communications (LSE: GAMA). It's a provider of tech-focused business communication solutions that operates in the UK and Europe. Listed on the London Stock Exchange's main market (after a recent promotion from the AIM), it's a member of the FTSE 250 index. It currently trades for 1,078p and has a market-cap of £986m. Analysts expect big gains Looking at price targets here, analysts seem to be very bullish on this stock. Currently, the average target's 1,663p, which is 54% higher than the current share price. If that was to be hit, a £2,000 investment today would grow to about £3,085, ignoring trading commissions. Meanwhile, a £5,000 investment would grow to about £7,700. It's worth pointing out that the highest price target within the City is 1,940p. That price – which is around 80% higher than the current share price – is from analysts at Deutsche Bank. All of these price targets need to be taken with a grain of salt however. Often, forecasts turn out to be wrong and there's absolutely no guarantee that Gamma shares will rise to these levels. I'm bullish too I'm an investor in Gamma though. And I do see the potential for 1,663p in the medium term. To my mind, this stock's extremely undervalued. Currently, it trades on a price-to-earnings (P/E) ratio of just 11.6. That P/E ratio is below the UK market average. And I don't think the discount to the market here's justified. This is a company that's growing at a healthy rate as businesses move to digitalise their communications (and it expands into Europe). This year, revenue is forecast to increase 13%. 'I look forward with confidence given the medium-term market opportunity.'Gamma CEO Andrew Belshaw in March It's also a company with a really consistent track record. Over the last decade, revenues have grown every single year. Additionally, it's very profitable. Over the last five years, return on capital employed has averaged 22%, which is excellent. On top of this, it has a solid balance sheet, pays regular dividends (the yield's about 2% and growing rapidly), and it's doing share buybacks (which could boost earnings per share). Put all this together and it doesn't make sense that it's trading so cheaply, in my view. Worth a look? Of course, there are risks here. One is the economic weakness in the UK, hampering growth at present and could continue to do so. Another is the company's expansion into Europe (and the integration of recent European acquisitions). There's no guarantee this will pay off. I believe this stock has a lot of potential however. I think investors should consider it today. The post Meet the UK growth stock that analysts say can turn £2,000 into £3,085 appeared first on The Motley Fool UK. More reading 5 Stocks For Trying To Build Wealth After 50 One Top Growth Stock from the Motley Fool Edward Sheldon has positions in Gamma Communications and London Stock Exchange Group. The Motley Fool UK has recommended Gamma Communications Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors. Motley Fool UK 2025 Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
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Chinese state media says Nvidia H20 chips not safe for China
BEIJING (Reuters) -Nvidia's H20 chips pose security concerns for China, a social media account affiliated with China's state media said on Sunday, after Beijing raised concerns over backdoor access in those chips. The H20 chips are also not technologically advanced or environmentally friendly, the account, Yuyuan Tantian, which is affiliated with state broadcaster CCTV, said in an article published on WeChat. "When a type of chip is neither environmentally friendly, nor advanced, nor safe, as consumers, we certainly have the option not to buy it," the article concluded. Nvidia did not immediately respond to a request for comment. H20 artificial intelligence chips were developed by Nvidia for the Chinese market after the U.S. imposed export restrictions on advanced AI chips in late 2023. The administration of U.S. President Donald Trump banned their sales in April amid escalating trade tensions with China, but reversed the ban in July. China's cyberspace watchdog said on July 31 that it had summoned Nvidia to a meeting, asking the U.S. chipmaker to explain whether its H20 chips had any backdoor security risks - a hidden method of bypassing normal authentication or security controls. Nvidia later said its products had no "backdoors" that would allow remote access or control. In its article, Yuyuan Tantian said Nvidia chips could achieve functions including "remote shutdown" through a hardware "backdoor." Yuyuan Tantian's comment followed criticism against Nvidia by People's Daily, another Chinese state media outlet. In a commentary earlier this month, People's Daily said Nvidia must produce "convincing security proofs" to eliminate Chinese users' worries over security risks in its chips and regain market trust.
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Buying 840 of these shares unlocks a £500 second income!
The London Stock Exchange is filled with plenty of lucrative opportunities to unlock a second income stream. And one that currently stands out among the FTSE 250 is Victrex (LSE:VCT), offering an enormous 8.6% dividend yield. That's almost three times the 3.3% payout offered by the FTSE 250. And by spending just over £5,700, investors can snap up 840 shares, adding £500 to their passive income. The question now becomes, is Victrex a good investment? Or is it a trap that could destroy wealth instead of creating it? Investigating the risk Let's start by digging into some of the problems Victrex currently faces. A big reason why the company's offering such a high payout is due to the share price tumbling 35% since the start of 2025. Victrex has been struggling through a few operational setbacks lately. Polymer production volumes have firmly underperformed expectations, particularly in China, where its new factory is now only expected to produce 50 tonnes of material versus the original target of 200 tonnes. At the same time, while the company has successfully attracted new customers to its business, not many of these have been after the group's premium product offerings. Subsequently, the group's average selling price has suffered, and profit margins are experiencing greater pressure, ultimately resulting in profit warnings and institutional investor downgrades. Pairing all this with mounting global trade tensions and geopolitical risks that could disrupt supply chains, it's not surprising to see investors grow more cautious. However, with the weak sentiment now seemingly already baked into its share price, could the stock secretly be a bargain? The optimist's case While Victrex is undoubtedly dealing with a challenging environment, there are still some encouraging signs of long-term potential. The firm operates in a relatively unique niche with relatively low levels of competition despite the critical nature of its polymer products. After all, they're used across the aerospace, healthcare, electronics, and energy industries. The initial launch of its new China facility has certainly been underwhelming. But it's still expected to deliver a 15% saving to production costs, allowing management to reduce the pressure on profitability even among its non-premium offerings. As such, the latest analyst forecasts project that earnings should rebound in 2026, provided no more spanners are thrown into the works. And combining this upcoming expected recovery with a weakened share price could open the door to lucrative dividends and capital gains over the next 12-24 months. The bottom line All things considered, Victrex appears to be a high-risk, high-reward investment story in 2025. If management can restore profit margins and demand from both healthcare and aerospace customers is restored, buying shares today could be lucrative in the long run. However, the company has made quite a few stumbles of late. So I'm personally keeping it on my watchlist for now. If the group can show more encouraging signs that a turnaround is under way, then taking a closer look could be warranted. The post Buying 840 of these shares unlocks a £500 second income! appeared first on The Motley Fool UK. More reading 5 Stocks For Trying To Build Wealth After 50 One Top Growth Stock from the Motley Fool Zaven Boyrazian has no position in any of the shares mentioned. The Motley Fool UK has recommended Victrex Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors. Motley Fool UK 2025
