20 value-focused top share picks for 2026

The upside potential of stocks including Domino's Pizza Group (LSE:DOM), discoverIE Group (LSE:DSCV) and Serica Energy (LSE:SQZ) has been highlighted by a City bank after it named 20 value-focused top picks for 2026.

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Peel Hunt’s selection ranges in size from small caps DFS Furniture (LSE:DFS) and Young & Co's Brewery Class A (LSE:YNGA) up to the £4 billion-valued FTSE 100 companies JD Sports Fashion (LSE:JD.) and British Land Co (LSE:BLND).

Ten sectors are represented, with builders, real estate, retail, and travel and leisure having the most picks with three each.

The definition of “value” varies by company and sector, with the average price/earnings multiple of this year’s selection on 11.4 times forecast 2026 earnings and 11.1x for 2027.

Peel Hunt’s 20 value stocks for 2025 delivered a weighted average return of 5%, with the stand-out performers being Kier Group (LSE:KIE) and MITIE Group (LSE:MTO)following gains of 54%.

The bank said: “We are not forecasting a material pick-up in economic growth across key markets in the next 12 months. However, there are always companies that are turning the corner in terms of performance, where the market has not yet spotted the potential value upside.”

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The biggest upside is seen at JD Sports Fashion, which Peel Hunt believes is “chronically undervalued” at 87p and seven times forecast 2027 earnings. It has a price target of 200p, pointing to the transatlantic retailer’s “tremendous” market position and cash on the balance sheet.

Industry conditions have been tough due to a lack of new product ‘heat’, while the consumer in each of JD’s territories has been under a cloud.

Peel Hunt said: “Through all of this, JD has remained true to its full-price strategy, and that should pay clear dividends in time. It is still the partner of choice for the main sports fashion brands, which means greater allocations of exclusive and hot products.”

It adds: “The consumer continues its love affair with JD, and its marketing to and relationship with the key 16-24 demographic remains on point.”

Gamma Communications (LSE:GAMA) is the other stock where Peel Hunt sees an upside of more than 100%.

UK economic headwinds meant the business telecoms specialist fell 40% in 2025, a performance the bank regards as out of kilter with reality. “It ignores the faster-growing, higher-margin German business, as well as the company’s continued product suite expansion to increase wallet share.”

The bank forecasts a 2026 net cash position of £86 million or 10% of market valuation, a large portion of which could be returned to shareholders. It has a price target of 1,820p.

Domino’s Pizza has de-rated to a record low price/earnings multiple of nine times, leaving the food delivery firm at an “excellent long-term entry point” and 60% below Peel Hunt’s price target of 275p.

The bank said: “We believe Domino’s valuation overlooks it having the most profitable franchisees and very large-scale competitive advantages.

“Its franchise model also generates about £75 million of annual free cash flow, which supports a consistent dividend (now yielding about 7%) and about £25 million of annual share buybacks.”

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Peel Hunt’s 1,000p valuation of discoverIE shares, which compares with a current price of 595p, anticipates the emergence of the next upcycle as the customised electronics specialist returns to an organic revenues growth rate closer to 6%.

The bank said: “The company has managed margins very effectively during the downcycle, which we believe should provide scope for reinvestment as markets recover.”  It regards the current rating of 15 times forecast 2026 earnings as very undemanding.

DFS Furniture was one of the few retailers to show positive forecast momentum in 2025, which Peel Hunt believes can continue in the current financial year

It points out that the Sofology owner boasts an extremely strong market position and has been making much better use of data in pursuit of a medium-term profit margin of 8%.

Shares have risen by a third in the past year to 176p, which compares with Peel Hunt’s 200p price target. “There has been a degree of a rerating, but not to anything like the level that we think the shares should be trading at, especially as cash generation is strong and a return to the dividend list is likely in 2026.”

British Land shares delivered a total return of 18.6% in 2025 but at a price of 405p Peel Hunt regards the FTSE 100 stock as an inexpensive way to gain exposure to quality real estate.

It has a target price of 470p: “We believe British Land’s £9.8 billion portfolio is well aligned to supply-constrained sectors, which should continue to enjoy demand-driven rental growth into 2026 and beyond.”

Former blue-chip stock B&M European Value Retail SA (LSE:BME) endured a miserable 2025, with shares currently languishing at near 165p compared with 340p in May.

It has new leadership in Tjeerd Jegen, who has already laid out his strategy for turning around a business that has 777 B&M stores in the UK and a further 135 outlets in France.

The bank, which has a price target of 200p, said: “We expect the ‘Golden Quarter’ will have been tough. However, there is a fine, highly cash-generative business here, and the valuation suggests another margin reset, which we simply do not see happening.

“A clear Buy for value players in our view, with France pretty much added in for nothing.”

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Other entries include recently listed tinned tuna firm Princes Group (LSE:PRN), which Peel Hunt sees moving above its IPO price of 475p and current position of 467p to a level of 560p.

Peel Hunt highlights an ambitious management team and active pipeline of acquisitions, primarily focused on European ambient food.

North Sea-focused Serica Energy experienced plant and equipment issues at its Triton infrastructure and export hub in 2025, offset by a strong drilling performance.

The bank believes Serica is well-positioned at the start of 2026 as it leverages recent acquisitions and benefits from strategic diversification, rising production levels and a robust balance sheet. It sees shares 41% higher at 252p.

The pub businesses Mitchells & Butlers (LSE:MAB) and Young & Co’s Brewery are both backed with upsides of 40% to 375p and 89% to 1,400p respectively.

Peel Hunt notes that Young’s was valued above 10 times earnings through the last decade. This is now at a record low of about six times, even though many of its key metrics are at record levels. “We believe rising earnings and falling debt should now convert into higher equity value.”

The other stocks on Peel Hunt’s list are 4imprint Group (LSE:FOUR), Breedon Group (LSE:BREE), Coats Group (LSE:COA), Grafton Group Units (LSE:GFTU), Keller Group (LSE:KLR), Rathbones Group (LSE:RAT), Shaftesbury Capital (LSE:SHC), TP ICAP GROUP (LSE:TCAP) and Workspace Group (LSE:WKP).