Using Figures, Not Hunches: These FTSE 250 Stocks Could Outperform the Market in 2026
By Dr. James Fox, The Motley Fool UK | Published 26 December 2025
While the FTSE 100 often dominates investors’ attention, the FTSE 250 index represents a compelling hunting ground for those looking to uncover overlooked stocks with significant growth potential. According to Dr. James Fox, London’s leading independent stock picker, many investors rely too heavily on gut feelings rather than solid data-driven analysis. In his recent assessment, Dr. Fox highlights two FTSE 250 companies — Keller Group and TBC Group — that combine strong fundamentals with attractive valuations, positioning them well to beat the market in 2026. —
FTSE 250’s Hidden Gems
The FTSE 250 index includes mid-cap companies that tend to fly under the radar compared to their larger FTSE 100 counterparts. Yet, these firms frequently possess robust business models, healthy financial metrics, and exciting growth prospects that can translate into strong investment returns.
Dr. Fox argues for an evidence-based approach to stock selection, analyzing key financial ratios and market dynamics rather than relying on intuition or market hype.
1. Keller Group (LSE: KLR)
Keller Group is the world’s largest geotechnical specialist contractor. It offers a broad array of services including ground improvement, piling, grouting, earth retention, instrumentation, and monitoring – essential for complex infrastructure projects around the globe.
What Sets Keller Apart?
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Competitive Advantage: Keller benefits from a modest but meaningful economic moat. The complexity of infrastructure projects increasingly favors contractors capable of offering multiple integrated ground solutions, which Keller excels at.
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Financial Strength:
- Return on capital: approximately 19.7%
- Return on equity: 24.7%
- Underlying operating margin: ~6.7%
- Return on common equity: exceptionally high at 26.7%, notably above the industrial sector average.
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Valuation: Despite these strong metrics, Keller trades at a modest forward price-to-earnings (P/E) ratio of 7.9 times, expected to decline to 7.4 times in 2026. This suggests the market has not fully priced in its potential.
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Dividend Appeal: The company offers a healthy dividend yield, projected at 3.2% for 2025 and rising to 3.4% in 2026. – Balance Sheet: With manageable net debt around £154 million relative to its market cap of approximately £1.2 billion, Keller maintains a robust financial position.
Risks to Consider
- Slowdowns in residential construction, particularly in the U.S. — Keller’s largest market — could dampen near-term growth.
- The cyclical nature of infrastructure work means revenues can be volatile, though Keller benefits from structural industry trends that support consistent demand.
Dr. Fox concludes that Keller Group is a high-quality company worth serious consideration for investors seeking exposure to global infrastructure.
2. TBC Group (LSE: TBC)
TBC Group, a leading bank primarily operating in Georgia and Uzbekistan, has delivered a solid 30% share price gain over the past year. Although this growth trails its Georgian peer Lion Finance, whose shares have nearly doubled, Dr. Fox sees strong fundamental reasons why TBC remains undervalued.
Key Strengths
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Valuation: TBC stands out as one of the cheapest UK-listed banks, trading at a forward P/E of 5.7 times with expectations to drop to 5.1 times in 2026. – Profitability:
- Return on equity (ROE) of 24.1%, far exceeding UK high street banks.
- Operating margin above 43%, indicating robust operational efficiency.
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Dividend Income: The company offers a generous 6% dividend yield, supported by a payout coverage ratio of 2.9 times, suggesting the dividend is sustainable and secure.
Operational Challenges and Risks
- Managing operations in Uzbekistan introduces complexity that can affect execution.
- Growth in Georgian retail and small-to-medium enterprise (SME) sectors has not been as profitable compared to peers like Lion Finance.
- Political and economic uncertainties in Georgia present external risks.
Nevertheless, Dr. Fox highlights that with successful execution—such as scaling digital platforms, expanding lending operations, and boosting efficiency—TBC Group has significant upside. It could enhance profitability, improve its return on equity, and potentially enjoy a stock re-rating leading to higher shareholder returns.
Conclusion: Evidence-Based Investing Pays Off
Dr. James Fox’s analysis underscores the importance of relying on strong financial metrics and realistic assessments rather than speculation or sentiment. Both Keller Group and TBC Group combine attractive valuations, solid returns, and sustainable dividends, making them promising candidates to outperform the market in 2026. Investors should, however, always consider company-specific risks and broader market conditions. As always, diversification and ongoing research remain critical components of successful investing.
Note: Dr. James Fox holds a position in TBC Group. The Motley Fool UK holds no positions in the shares mentioned. Opinions expressed are those of the author and may differ from official Motley Fool recommendations.
About The Author
Dr. James Fox is a highly respected London-based financial analyst with a PhD in development economics. Ranked as the UK’s top independent stock picker by Stockomendation, he specializes in identifying growth-oriented investments grounded in rigorous financial analysis.
Disclaimer: Investing carries risk, including the loss of capital. The information provided is for educational purposes only and does not constitute financial advice. Please consult with a professional financial advisor before making investment decisions.