Analysts expect three UK stocks to climb at least 66% over the next year. Markets are quite volatile at the moment, with oil prices swinging and geopolitical events causing price jumps. But those three names trade below the analysts' average targets, and each carries a clear case for a long-term ISA holding.

Why some value still exists

Markets haven't been kind to anyone seeking certainty. Trading patterns differ by sector — oil and mining jump when tensions flare, while energy shares have slumped at other times.

This uneven movement creates opportunities where some stocks appear undervalued.

Analysts and brokers use different models, of course. Yet the snapshot from market data and company results shows a handful of UK-listed firms that, on average, are sitting well below the price targets set by professional forecasters. TradingView.com charts show mixed sector moves; that helped the companies below fall into the 'undervalued' bucket for some market-watchers.

Right now, three names stand out: Barratt Redrow (LSE: BTRW), Burford Capital and GB Group. Each is trading at prices that analysts reckon could rise 66% or more within 12 months.

Barratt Redrow — a cyclical recovery with income

Barratt Redrow looks like the classic housing-recovery story. Thirteen of 19 covering analysts rate it a Strong Buy, and their average 12-month target sits roughly two-thirds above the current share price.

RBC Capital — the broker that recently reassessed the stock — upgraded Barratt to Outperform and lifted its target from 350p to 425p. That move alone pushed some investors to take a second look.

Operating numbers back some of the optimism. Barratt reported revenue up 29% year on year and a 43% rise in earnings, and it pays a yield that many consider attractive: about 7% on the figures cited by market updates. The balance sheet shows only modest leverage, giving the housebuilder room to operate through choppier periods.

However, housebuilding is very sensitive to interest rate changes, which is an important risk to consider. Mortgage costs and buyer sentiment change quickly when central banks tighten. Barratt's dividend looks tempting, but coverage is thin — and that raises the real possibility of a cut if market conditions worsen.

Burford Capital — litigation finance with wide margins

Burford Capital operates in litigation finance, a niche that can deliver oversized returns when cases resolve in the firm's favour. Five of six analysts covering Burford give it a Strong Buy rating, with an average 12-month upside forecast of about 107% above today's price.

Mastheads

Financially, Burford shows high profitability. The company reported an operating margin of 59.3% and a forward price-to-earnings multiple of around 5.5. Its FY25 results showed new definitive commitments up 39% year on year, and the board declared a final dividend of 6.25 US cents per share.

Still, the timing of returns in litigation finance can be unpredictable. Returns depend on when cases close and on outcomes that are never certain. That randomness can make quarterly earnings and cash flows lumpy — good for upside, painful when a major matter is delayed or lost.

GB Group — identity, data and small-cap upside

GB Group is a smaller stock by market value, but all five analysts covering it rate it a Strong Buy, with average targets roughly 82% above today's level. The company has pushed shareholder-friendly moves recently — it extended a buyback by £10m and refinanced a £175m revolving credit facility through to 2030.

Results show earnings up about 10% year on year and a conservative balance sheet with low net debt. Those are useful attributes for a small-cap: they give management flexibility to invest and to return cash when growth stalls.

That said, small-cap stocks like GB Group carry higher risks. GB Group's size means it can swing more on company-specific news and on changes to the regulatory or payments environment. For ISA savers who favour a steadier ride, a smaller weighting may be sensible.

How to think about these names for an ISA

ISAs are about tax-efficient, long-term ownership. That changes the way you assess volatility. Short-term swings matter less when the objective is to shelter gains from tax and hold positions over years.

That said, not every cheap-looking stock is a bargain for every ISA holder. Barratt offers income but is exposed to interest rates. Burford can deliver high returns but timing is unpredictable. GB Group has growth and buybacks, but it remains a small-cap with higher idiosyncratic risk.

Investors might consider dividing their ISA allocation based on risk, putting more into stocks they understand well and less into the more volatile ones. Balance matters. Spread and position size are as important as entry price.

If you're investing for the long term in an ISA, you can tolerate some price fluctuations. But also remember that forecasts are just that — forecasts. Analysts' price targets move as new data arrives, and the 66%-plus figures referenced here represent averages of those forecasts, not guarantees.

What the numbers show and what they don't

Market reports often simplify complex companies by focusing just on potential gains. The headlines here — 66%, 82%, 107% — come from consensus analyst targets and broker notes. They're helpful for screening, but they don't replace due diligence.

For example, Barratt's revenue and earnings momentum are real. Burford's margins and increased commitments are real. GB Group's buyback and refinancing moves are real. Each of those facts gives investors something concrete to weigh against the risks.

Also, keep in mind liquidity—smaller stocks can be harder to trade without affecting the price. Smaller names can be harder to trade without moving the price. If you plan to use a Stocks and Shares ISA, check the average daily volume before committing a large slice of capital to any single small-cap name.

Finally, diversification within an ISA is simple and effective. Combine value names with steadier, dividend-paying stocks, or mix in an index tracker to lower single-stock risk. For many savers, that approach will smooth returns while keeping the benefit of tax relief.

To sum up the evidence on each company: analysts and brokers have placed sizable targets ahead of today's prices, company results give reasons for cautious optimism, and sector-specific risks mean active monitoring is sensible.

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RBC Capital upgraded Barratt Redrow to Outperform and raised its target from 350p to 425p.

This article was created with AI assistance.