Here’s my top FTSE 250 pick for 2026
UK stocks are often overlooked by international investors and this is especially true of the FTSE 250. As a result, it can be a really interesting place to look for potential opportunities.
With 2026 on the way, I think there are a few stocks that look very attractive from an investment perspective. But one in particular stands out to me.
Under-the-radar opportunities
FTSE 250 stocks often get missed by institutional investors and there are good reasons for this. Theyâre often too small and the companies arenât particularly well-known outside the UK.
Given this, they can represent a lot of work for not a lot of potential opportunity. So it just doesnât make sense for a lot of global investment firms to pay much attention.
That however, isnât the situation for retail investors in the UK. Most of our portfolios arenât worth billions of pounds (mine certainly isnât) so FTSE 250 businesses are plenty big enough.
In a lot of cases, UK residents also know quite a bit about the companies through first-hand experience. As a result, I think it can be a great place to look for opportunities.
Before getting to my top FTSE 250 pick for 2026, Iâd like to give a couple of honourable mentions. Greggs, JD Wetherspoon and Vistry were all stocks I thought carefully about.
I think thereâs a lot to like about each of the underlying businesses and none of the stocks seems overvalued to me right now. But for my number one choice, Iâve gone elsewhere.
Top of the pile
At the top of my list is Gamma Communications (LSE:GAMA). The main reason is that I think the cloud communications firm has both short- and long-term potential.
The company’s been building a presence in Germany via some recent acquisitions. And while the market there is large, uptake of cloud communications has been relatively low.
Thatâs a long-term growth opportunity, but there are also reasons to be optimistic about the near future. These come from the UKâs shift away from its copper telephone network.
This is set for January 2027, but a lot of companies havenât prepared for the switch. So 2026 should be a busy year for communications providers and Gamma has a strong position.
The obvious risk here is the possibility of this being delayed. Itâs happened once (the switch off was supposed to be in 2025) so itâs hard to rule out the possibility of it happening again.
In that case, Gamma might not see the kind of growth Iâm anticipating in 2026. But Iâm expecting it to show up sooner or later and it should be a big boost to earnings when it does.
Iâm a buyer
Gammaâs share price has fallen 43% in the last year. But at a price-to-earnings (P/E) ratio of 17, itâs now trading at a level that doesnât reflect such high growth expectations.
From here, I think the stock has a lot of potential to consider. This comes from the UK in the short term and its expansion into Germany over the long term. Thatâs why itâs my top FTSE 250 pick for 2026. And itâs why Iâll be looking to add to my investment in the new year.
The post Here’s my top FTSE 250 pick for 2026 appeared first on The Motley Fool UK.
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Stephen Wright has positions in Gamma Communications Plc, J D Wetherspoon Plc, and Vistry Group Plc. The Motley Fool UK has recommended Gamma Communications Plc, Greggs Plc, and Vistry Group 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.
