Key Points
- Barclays has named flexible workspace provider IWG as its top UK stock pick. The bank believes IWG could double its earnings in the next five years.
- IWG is benefiting from the major shift to flexible and hybrid work.
- Other top picks include energy company SSE and insurer Prudential.
- Barclays is bearish on homebuilder Vistry Group, forecasting a 21% downside.
Flexible workspace provider IWG is the top stock pick in the UK, according to a new report from Barclays. The investment bank believes the company could double its earnings and see its free cash flow grow four to five times over the next five years, with a potential upside of nearly 37% for the stock.
IWG, which operates serviced office spaces, is perfectly positioned to capitalize on the massive shift in the office market. As more companies embrace flexible and hybrid work, the demand for IWG’s services is booming. The company is expanding rapidly through a “capital-light” model, partnering with landlords who cover the build-out costs while IWG operates the spaces.
Barclays is also highlighting several other promising UK stocks. Energy company SSE is their second pick, with analysts seeing it as “best positioned to grow with the grid capex supercycle.”
Insurer Prudential is another top choice, with an upcoming IPO of its Indian asset management business seen as a major catalyst. Consumer goods giant Unilever also makes the list, with the upcoming spin-off of its Magnum ice cream business expected to boost its growth and profitability.
However, it’s not all good news. Barclays has an “Underweight” rating on homebuilder Vistry Group, forecasting a 21% downside for the stock. Analysts are worried about the company’s ability to hit its growth targets while also paying down its debt.
