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Even with the stock market hovering near record territory, there are plenty of top-notch growth stocks hiding in plain sight. And every month, new reports often comes out from institutional analysts sharing their latest ideas and opportunities within the market.
For October, two rather different companies have caught the experts’ attention – one on track to deliver an impressive turnaround, the other looking to capitalise on British artificial intelligence (AI) data centres. Let’s take a closer look.
A bathroom turnaround?
The first pick comes from the analyst team at Cavendish. Norcros (LSE:NXR) owns market-leading bathroom brands including Triton, Merlyn, Vado and Fibo. And while the company’s been going through a bit of a rough patch, the general thesis here is that management’s turnaround strategy’s starting to bear fruit.
Its latest figures show revenues growing 10.6% to £393.4m in its 2026 fiscal year (ending in April), while underlying operating profit jumped 7.9% to £48m. But looking at the first quarter of its 2027 fiscal year, top-line growth has accelerated to 27.9%!
To be fair, a large chunk of its expansion stems from its recent Fibo acquisition. But it’s nonetheless an encouraging sign that the deal might be generating value. And with the overall business gaining market share in an otherwise subdued market, Norcros is positioning itself for strength once the housebuilding and home renovation cycle starts to ramp back up.
The question ultimately comes down to timing. No one knows when the cycle might shift. And with interest rates potentially on their way to march upward later this year, any previous hopes of a near-term market bounce back have likely been squashed.
Preparing to power the AI boom
The next pick is Drax Group (LSE:DRX), coming from the desks of Longspur Research. As a quick reminder, Drax generates electricity using biomass, hydro, gas, and more recently solar and wind.
Yet what has the experts excited is management’s plans to gain even more direct exposure through the construction of a 100 MW data centre that it can lease out to AI partners.
As for its traditional power assets, these are also making waves. So much so that just last month, management raised its guidance, with full-year adjusted EBITDA now expected to be around the top end of the £680m-£711m analysts were projecting.
However, there are a few caveats. Hitting this earnings target depends on its energy assets continuing to perform well with no surprise disruptions. And as for its data centre ambitions, it’s important to highlight that construction hasn’t actually started yet.
Drax still needs to secure planning permission from North Yorkshire Council. And in a bit of a setback, the company failed to secure ‘AI Growth Zone’ status from the government.
While this wasn’t essential, it could have helped fast-track the planning approval process. Either way, realistically, the data centre likely won’t be operational until the end of the decade.
So where does that leave investors today?
What’s the verdict?
Both growth stocks offer different and unique opportunities. Norcros looks like a potentially steadier turnaround story of gradual recovery and growth, whereas Drax carries the more explosive but speculative catalyst.
There’s significant execution risk surrounding both businesses. Nevertheless, I think each company deserves a much closer look. And they’re not the only growth stocks on experts’ radars today…
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Zaven Boyrazian does not hold any positions in the companies mentioned.
This story originally appeared on Motley Fool
