Top UK Mid & Small Cap Stocks to Watch in 2025

Barclays highlights six high-potential UK firms despite market uncertainty

UK investment bank Barclays has named six standout mid and small-cap stocks it believes are poised for growth in 2025 and beyond. These companies span sectors including financial services, homewares, industrial equipment, and housebuilding, each offering compelling value or growth potential according to the bank’s detailed analysis.

The focus is on businesses with strong competitive advantages, resilient business models, and clear strategies to expand market share or margins — even amid economic headwinds.

1. IG Group Holdings PLC (LON: IGG)

Barclays rating: Overweight (OW)
Price target (PT): 1,350p
Barclays is bullish on IG Group's outlook under new leadership. Key drivers include product innovation and expansion across its addressable markets.

• Upside case: 2,080p (10% higher revenue and margin growth)
• Downside case: 690p (risk of revenue slowdown)

The fintech firm benefits from volatility-driven trading activity, which could attract investor interest if market turbulence increases.

2. Dunelm Group PLC (LON: DNLM)

Barclays rating: Overweight
Price target: 1,350p
The homewares retailer is set to benefit from both in-store and online growth, as consumer demand in the sector remains strong.

• Upside: 1,775p (boosted online performance and modest store growth)
• Downside: 575p (macroeconomic drag or stalling market share)

Dunelm has proven resilience in challenging retail conditions, making it a potential safe haven among consumer discretionary stocks.

3. Rosebank Industries PLC (LON: ROSE)

Barclays rating: Overweight
Price target: 430p
The acquisition of ECI is seen as a transformative move for Rosebank. Barclays forecasts higher-than-expected EBITA margins by FY28, well above the company’s guidance.

• Upside: 485p (stronger-than-expected profit delivery)
• Downside: 325p (economic deterioration or underwhelming integration)

A return on equity of 2.4x on the ECI deal could make Rosebank attractive to value-focused investors.

4. Weir Group PLC (LON: WEIR)

Barclays rating: Overweight
Price target: 2,950p
As a major player in mining equipment, Weir is expected to deliver robust growth through its high-margin aftermarket business and operational improvements.

• Upside: 3,250p
• Downside: 2,500p

The company’s consistent earnings and market position in mining equipment make it appealing during commodity upswings.

5. Taylor Wimpey PLC (LON: TW)

Barclays rating: Underweight
Price target: 110p
Barclays takes a cautious stance here, citing concerns over slowing outlet openings and rising financial gearing by 2027.

• Upside: 209p (if sector sentiment improves)
• Downside: 91p (weaker housing market and margin pressure)

Despite being a major housebuilder, Taylor Wimpey’s growth appears constrained, and the dividend outlook may weigh on sentiment.

6. Bellway PLC (LON: BWY)

Barclays rating: Overweight
Price target: 3,350p
Bellway stands out for its volume growth potential and attractive valuation relative to peers. The upcoming strategic review and focus on ROCE improvement provide further upside.

• Upside: 4,592p (mid-cycle returns achieved by 2027)
• Downside: 1,807p (if profitability lags WACC)

Barclays sees Bellway as a leading candidate for re-rating among UK housebuilders.

Final Thoughts: Investment Implications

While larger-cap UK equities face structural challenges, these mid and small-cap names may offer investors more compelling upside. Sectors like fintech, homewares, and mining equipment are particularly attractive in today’s environment of shifting macro conditions.

With growth strategies already in play, Barclays’ picks show resilience and long-term value — but as always, stock selection should be aligned with your investment time horizon and risk appetite.

For investors looking to diversify within UK equities, these six names represent a solid starting point for 2025 research.

Sources: (Investing.com, Barclays.co.uk)