FTSE 250 correction: a rare chance to buy cheap shares

With the FTSE 250 dropping just over 10% since 27 February, the UKâs flagship growth index has officially dipped into a technical market correction.

Such downward volatility is obviously unpleasant. But at the same time, itâs also helped create some tremendous buying opportunities for long-term investors. And as anyone who took advantage of the 2022 market correction saw, the returns can be epic.

Fun fact: since September 2022, the FTSE 250 has generated a total return of 39.3% in less than four years for index investors. But for some stock pickers, the results have been even more explosive.

For example, the shares of Avon Technologies have delivered a 137% total return during this period. Senior delivered a similar performance of 115%. And Goodwin absolutely stole the show with a staggering 750%+ gain!

The question now is, which company in this 2026 correction will be the next Goodwin?

A big winner at a bargain price?

Sadly, thereâs no way of knowing for certain which FTSE 250 stocks are on track to deliver a near-9x return over the next four years. But there’s at least one company that institutional analysts have flagged as being seriously underappreciated by the market right now.

That business is Gamma Communications (LSE:GAMA).

Since the start of 2025, the B2B communications specialist has seen its share price compress by over 40%. Subsequently, the stock is now trading at its lowest point since early 2019. But could this be a near-once-in-a-decade buying opportunity?

The experts certainly seem to think so. In a bizarre twist, despite the share price slipping, institutional analysts are overwhelmingly bullish, with eight out of nine recommending the stock as either a Buy or an Outperform with an average share price target of 1,500p â 74.6% higher than where the shares are trading today!

An incoming surge

The biggest growth catalyst for this business is coming in January 2027.

Ten months from now, BT Group will be switching off its legacy copper telephone network (PSTN), forcing hundreds of thousands of businesses to migrate to a cloud-based solution â the very thing Gamma specialises in.

So, why is this FTSE 250 stock still heading in the wrong direction?

While analysts are bullish, it seems investors are reluctant to pull the trigger. After all, BT was supposed to switch off PSTN back in December 2025, but the deadline was extended to 2027. Another delay could mean this incoming growth catalyst might be further away than investors hope.

At the same time, continued weakness throughout the UK economy, particularly for small and medium-sized businesses, has resulted in a reluctance for companies to invest in their communication infrastructure.

These macroeconomic headwinds mean margins have come under pressure. And as a result, short-term investor sentiment has suffered even with explosive long-term tailwinds sitting just around the corner.

So, is this a buying opportunity?

Providing the PSTN switch-off isnât delayed again, Gamma Communications looks seriously undervalued in my eyes right now. Obviously, it’s not a risk-free investment. But with investors seemingly pricing it as if another delay is inevitable, the stage is set for an awesome potential share price jump over the next 12 months.

Thatâs why I think Gamma Communications is worth mulling over. And itâs not the only exciting potential buying opportunity Iâve spotted in this correctionâ¦

The post FTSE 250 correction: a rare chance to buy cheap shares appeared first on The Motley Fool UK.

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Zaven Boyrazian has no position in any of the shares mentioned. The Motley Fool UK has recommended Gamma Communications 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.