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Stock prices have skyrocketed throughout the FTSE 250 in recent weeks. The UK's second most prestigious stock index is up 4% so far this quarter, boosted by hopes of interest rate cuts and an improving British economy.
But many of the top stocks in the index still appear undervalued at current prices. Here are two that I think could drive significant share price gains in the coming months.
In fact, City analysts believe his value will soar between 14% and 18% over the next 12 months. Here's what investors need to know about them.
Games Workshop Group
Games workshop(LSE:GAW)'s earnings are dependent on strong economic conditions. Its fantasy products attract a loyal fan base, but the retailer and manufacturer is not immune to pressures on consumer spending.
However, as inflationary pressures ease and interest rate cuts are expected, demand for its wargaming systems and associated products is expected to recover. This, in turn, is expected to drive its share price north.
Currently, four analysts rate the company's shares. And the average 12-month price target between them stands at £115.10 per share. That's a roughly 18% premium to current levels.
Games Workshop is the market leader in what is a rapidly growing global hobby. His miniature war games (the most famous of which is warhammer 40,000 – sell in large volumes and with huge margins.
But it remains vulnerable to competition from more affordable rivals.
However, he is working hard to try to prepare his business for the future. Not content with the global expansion of its stores, the company is looking to take profits to the next level by producing shows and movies with the streaming giant. amazon.
Licensing your intellectual property (IP) would open your universe to a much larger audience. And this could increase royalty income as well as sales of its miniatures and gaming systems.
News about its partnership with amazon is expected soon and could be the next big catalyst for Games Workshop's share price.
ITV
Commercial stations such as ITV (LSE:ITV) are also very sensitive to economic conditions. When consumers are tightening their pocketbooks and inflation is hurting corporate profits, advertising spending tends to fall sharply.
In fact, this has hit this FTSE 250 company hard in recent times and remains a risk for the company. But signs of recovery in advertising budgets suggest the company's profits and share price could be on the verge of a recovery.
City analysts certainly think so. ITV's share price is expected to reach 89.44 pence per share over the next year. This would constitute a 14% profit margin from current levels, and is the average estimate of 10 brokers.
The broadcaster's advertising revenue increased 3% in the first quarter and is expected to accelerate up to 12% in the current quarter. As the UK economy moves away from recession and interest rates (likely) fall, they could continue to move, sending profits sky-high.
But this is not the only possible factor influencing ITV's share price. Momentum remains strong for your ITVX streaming platform, while revenues are also rising at its production arm ITV Studios.
