- Softcat is aligned with the changing dynamics in the I.T reseller market
- Tritax insiders are buying, and the fundamentals look promising
- Diploma’s product offering is in line with the needs of the health sector
A lot of stocks shot up by 100% or more in 2020 and early 2021. This was largely driven by the stock-buying frenzy that characterized the pandemic lockdown period. While things have slowed down a little bit, some stocks still have the potential for exponential gains in the next 5-years.
These three UK stocks have the potential to double in value by 2025: Softcat (SCT), Tritax (BBOX), and Diploma (DPLM). Here is how things could play out for these three.
Growing demand for customized I.T services
The I.T reseller market is expected to grow at a rate of 3.2% in 2021. With the world economy reopening post-pandemic, this market could grow at an even faster rate.
Aside from the economy opening up again, the I.T reseller market is changing, which presents an opportunity for companies that can position themselves for the new economy. In the past, the role of I.T resellers was to explain software features to the customers. Most software is now either offered as a service or using a freemium model.
This is an opportunity for resellers who don’t just explain software features but also customize it to meet customer needs. Such resellers have the opportunity to establish long-term clients by offering solutions that are in line with the customer’s business needs.
Softcat (SCT) is one of the companies that is fully aligned with these changing dynamics of the I.T reseller market. The company doesn’t just sell I.T services; it also designs and implements workplace technologies. This gives it a strategic edge in terms of developing relationships with clients, and growing revenues.
The edge that this company has on this front is already being reflected in its share price. In the past year, Softcat stock has gained by 76%. At the same time, the company is well-positioned in other aspects of the value-added reseller market, in specifics, the implementation of cloud data centers and internet security services.
The cloud computing business, for instance, is one of the fastest-growing in the world. Research by OpsRamp revealed that over the next two years, 84% of major corporations intend to increase their use of cloud-based services.
This is a big deal and could significantly boost the revenues and share prices of top cloud services implementation companies such as Softcat. With all these factors going for it, there is a good chance that this UK stock could double in value by 2025.
Insiders are buying Tritax
Over the past year, insider buying of Tritax (BBOX) has shot up exponentially. Back in March, one of the company’s partners bought 7.8% more of its share. The single purchase by Mark Glen Shaw was for £272k worth of shares.
While this is the largest insider purchase in the past year, it was not the only one. Two months ago, another of the company’s partners, James Dunlop purchased 5.1% more of the stock.
Insider buying is not some surefire way to tell whether a stock will go up, but it is a good indicator of the direction that a stock can go. That’s because insiders usually have a better idea of the company fundamentals and prospects than anyone else on the outside.
In this case, it means they believe Tritax’s fundamentals and market outlook will keep getting better over time. Insider outlook on this stock seems to be pretty in line with its performance so far. Over the past year, Tritax has gained by 44%, making it one of the best performers in the FTSE 250.
Aside from insider buying, BBOX operates in one of the hottest sectors of the economy at the moment. UK real estate is booming, and all industry players are reaping big.
Between June 2020 and June 2021, UK real estate prices increased by 16%. This is the highest single-year price increase since 2004. While this was largely fueled by the government’s subsidies following the pandemic, growth is likely to remain strong due to improved consumer sentiment.
Aside from that, the company is invested heavily in logistics-focused real estate. This is strategically in line with the growth of the eCommerce market, which is a key driver to this real estate subsector.
With the shift to eCommerce set to grow even bigger after the 2020 pandemic accelerated the trend, companies operating in big box logistics are set to grow.
This makes BBOX a top UK stock with a high potential to double in value by 2025, if not much earlier.
This specialized tools stock should have no problem doubling in the next 5-years.
Diploma (DPLM) has been one of the top stock performers in the last five years. In this period, it has given investors a return of 295%. In the past year alone, it has been one of the top performers in the FTSE 250, with gains of 40%.
The company’s prospects going forward are boosted by the nature of the products it deals in. Part of this company’s core product offerings is the supply of equipment used in blood testing, tissue testing, and other disease pathology aspects. The company is also engaged in the supply of consumables that are a necessity in hospital operating rooms.
With people, more health-conscious than ever, and the population of older people on the rise globally, the demand for these products will only grow going into the future. This pretty much guarantees this company revenue growth, and by extension, value appreciation.
It is also noteworthy that insiders have been buying this stock over the past year. One of the more notable insider purchases was by CEO Jonathan Thompson. Thompson, who also doubles up as a director, bought £57k worth of the stock.
All these are pointers to a stock that could easily double in value in the next 5-years or less.
eToro - Buy Top UK Stocks with 0% Commission
eToro have proven themselves trustworthy within the stock market over many years – we recommend you try them out.
Your capital is at risk. Other fees may apply