Look to British stocks to lead the charge as the Magnificent Seven falter
Gervais Williams, fund manager, The Diverse Income Trust, picks three British stocks where he'd put his money

Over the last decade, stock market returns have been excellent. Over the 10 years to 22 April 2025, the Magnificent Seven soared by a factor of 21.6 in sterling terms.
Good news, surely? Well, yes and no. High returns are wonderful. But when supersonic returns persist for years and years, they breed two deep-seated problems.
Firstly, they horribly distort investors’ behaviour. Risk-seeking becomes ingrained. And when the music stops, the riskiest stocks suffer massive setbacks. Risk-seeking positions suffer giant, permanent losses of capital.
MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Secondly, outright winners often have a degree of similarity. Persistent success leaves the market littered with correlated positions. That doesn’t matter on the way up, but at the peak, it does.
So what can market participants do? When the market’s patterns change, we would argue that we all need to root out holdings that are somewhat correlated with the winners. We have a saying that when it comes to moments of change, make sure you change enough. So if the Magnificent Seven are over, where to go?
Our view is to go for those with the opposite characteristics: not all-out cash-flow draining growth, but persistent expansion and bountiful cash flow. Not US-listed, but UK-quoted. Not mega cap, but multi cap, including small and micro caps. Fortunately, the Diverse Income Trust has a whole portfolio full of such companies. We think we are at the start of a new UK supercycle.
Profiting from protectionism
Globalisation may have supplied more of everything, but with protectionism, expect either intermittent shortages of regular lines, or, when a distant retailer goes bust, a market suddenly flooded with containers full of things sold off cheaply.
For retailers, all this stop/start will be a nightmare. Conversely, online category killers should have a disproportionate advantage. Their offerings can change hourly, and when they buy job lots, they can pass on the giant savings. Most shoppers aren’t after a specific brand of new fridge, freezer, or bathroom basin.
They want choice: great products at great prices, delivered the next day. In our view, both AO World (LSE: AO) and Victorian Plumbing (Aim: VIC) are set to expand and generate bountiful cash flow.
Defence spending, meanwhile, is set to rise, not on fighters or tanks, but on drones – loads of them. Development cycles will be short, incorporating all the latest technologies.
This will put defence control systems under pressure to keep up; they will need to be upgraded all the time. Concurrent Technologies (Aim: CNC) designs and supplies sophisticated defence computer boards. Over recent years, the company has won a series of ever larger orders. In our view, this is just the start.
A winner in online gambling
Regulated online gambling is rolling out across major economies, such as the US. Competitors need winning games, and Slingo is one of the most popular. Gaming Realms (Aim: GMR), a UK-quoted micro-cap, owns it.
Gaming Realms already has net cash on the balance sheet, with yet more cash piling up at an accelerating pace. During the mega-cap era, the problem was that some micro caps were just too tiny and hence too cheap for professional investors to consider. Yet when they start to appreciate, institutions suddenly discover them, and their share prices can swiftly rise dramatically.
This article was first published in MoneyWeek's magazine. Enjoy exclusive early access to news, opinion and analysis from our team of financial experts with a MoneyWeek subscription.
Get the latest financial news, insights and expert analysis from our award-winning MoneyWeek team, to help you understand what really matters when it comes to your finances.
-
What is the 25x retirement rule and does it work?
The 25x retirement rule has been around for decades but many experts question if it is a suitable strategy
-
When is the self-assessment tax return deadline?
If you are self-employed, rent out a property or earn income from savings or investments, you may need to complete a self-assessment tax return. We run through the deadlines you need to know about
-
What we can learn from Britain’s "Dashing Dozen" stocks
Stocks that consistently outperform the market are clearly doing something right. What can we learn from the UK's top performers and which ones are still buys?
-
Europe’s forgotten equities offer value, growth and strong cash flows
Opinion Jonathon Regis, co-portfolio manager, Developed Markets UCITS Strategy, Lansdowne Partners, highlights forgotten equities he'd put his money in
-
How retail investors can gain exposure to Lloyd’s of London
It’s hard for retail investors to get in on the action at Lloyd’s of London. Here are some of the ways to gain exposure
-
Picton Property: a deep-value property play
Picton Property has all the qualities of a future takeover target
-
How to invest in the travel industry's boom as tourists get back on the road
The travel industry is in rude health despite uncertainty about the global economy, Trump’s policies and geopolitical concerns. Investors should buy in now
-
First Solar is set to shine – should you invest?
Solar-power specialist First Solar will benefit from Donald Trump’s policies, says Matthew Partridge
-
Profit from the potential in funds focusing on private assets
Opinion Charlotte Cuthbertson and Tom Treanor of the Migo Opportunities Trust highlight three funds where they'd put their money
-
Camellia: an unusual tea producer that rewards patient investors
Camellia is shedding its eclectically diverse portfolio of assets to concentrate on its strengths. For investors, it's a rare opportunity