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I’ve been hunting for UK stocks with massive growth potential, and these two battered companies caught my eye. Brokers have gone bananas for both, predicting terrific things in the year ahead. Can they fulfil the hope and hype?
Entain shares are a gamble
The first stock is global sports betting and gaming group Entain (LSE: ENT), whose shares have plunged 78% in five years. It dropped out of the FTSE 100 last month. What went wrong?
Revenue actually rose 3% in 2025 to £5.26bn, while underlying operating profit jumped 40% to £861.2m. Its US joint venture BetMGM has also made progress.
However, Entain reported a statutory loss after tax of £680.5m, including a £488m impairment linked to UK gambling tax increases.
The UK government hiked remote gaming duty from 21% to 40% in April, and is lining up a new 25% tax on remote betting from April 2027. The Treasury expects to raise more than £1bn a year from gambling tax reforms, sending many investors to the exits.
Entain carries substantial debt, faces intense competition and has suffered management upheavals. Yet the shares now look dirt cheap, with a trailing price-to-earnings (P/E) ratio of just 7.2. The trailing dividend yield is 4.4%.
The 21 brokers issuing one-year consensus share price targets produce a median share price target of 851p. If correct, that would mean a stunning 90% gain from today’s 448p. Of those brokers, 18 rate it a Strong Buy, one more says Buy and three say Hold. Not one says Sell.
These are incredibly bullish ratings, but I’m wary. Gambling remains both controversial and a handy source of tax revenue for cash-strapped politicians. I considered Entain some 18 months ago but backed off. Given subsequent performance, I clearly dodged a bullet. Brave investors might consider it at today’s low price, but should tread carefully.
St James’s Place needs to rebuild trust
Financial adviser and wealth manager St James’s Place (LSE: STJ) has also endured a miserable few years. Its shares have fallen 30% over five years and 20% over 12 months. It’s still in the FTSE 100 though.
In 2024, it suffered a major reputational blow, setting aside £426m for refunds to customers after failing to establish that ongoing advice services had been delivered. It has since overhauled charges, removed some exit fees and introduced tighter checks on advice provision. As a personal finance journalist, the scandal confirmed my suspicions about its charging model.
The shares rallied as investors hoped the worst was over, but renewed weakness shows confidence remains fragile.
Brokers are nevertheless optimistic, forecasting a consensus 47% rise from 1,102p to 1,619p. Twelve rate the shares a Strong Buy, one says Buy and five say Hold. Again, no Sell ratings. With a P/E ratio of 10.9x, St James’s Place looks reasonable value. The 1.6% trailing yield is modest.
St James’s Place has taken a few steps in the right direction, but I still won’t buy its shares today. At The Twelfth Magpie we’re much more enamoured of this growth stock. It’s forecast to grow an impressive 35% and its reputation could hardly be higher…
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Harvey Jones does not hold any positions in the companies mentioned.
This story originally appeared on Motley Fool
