Barclays Capital has named six London-listed stocks to buy as it believes the U.K. stock market is currently “cheap” and “under-owned.” Two of the investment bank’s picks — Drax Group and IG Holdings — are also predicted to rise by more than 50% in the next 12 months, thanks to several policy tailwinds. The bank said that the return of fiscal credibility at the British government has reduced the pressure on the Bank of England to overtighten and should provide some relief to beaten-down domestic and small-cap stocks. The U.K. economy has been under pressure following former Prime Minister Liz Truss’ disastrous “mini-budget” in September, which prompted banks to withdraw lending amid concerns over spiking interest rates. “Financial conditions tightened materially last year amid a weakening growth backdrop, but the recent decline in energy prices does relieve stagflationary pressures somewhat,” said analysts at the bank in a research note to clients on Jan. 23. “This should help the export-oriented FTSE 100/large caps space, which we continue to prefer.” “The region remains cheap, under-owned, and benefits from favorable sector exposure between value/commodities and defensives,” the analysts added. Drax Group Drax, which runs one of the last remaining biomass and coal-fueled power stations in the U.K., is one of Barclays’ preferred stocks. The investment bank said the clarity on windfall regulations set by the U.K. government, an attractive valuation, and a series of catalysts expected to come into play soon helps the stock’s growth outlook. “Drax should see rising earnings upgrades as it starts to sell power beyond its current hedged position, at increasingly higher prices,” the analysts led by Emmanuel Cau said. Barclays expects the stock to rise by 72% to £11 ($12. 4) over the next 12 months. Drax shares were trading around £6.37 on Friday. IG Group Shares of stockbroker IG Group could rise by 55% over the next year to £12 a share, Barclays analysts have said. The investment bank believes a high-interest rate environment allows the stockbroker to earn interest on a customer’s deposit, further increasing its profit margins. “As market conditions normalise, I.G. delivered flat revenues in core markets+ in FY22 vs FY21A. We believe growth should be achieved once more in FY23E, helped by customer recruitment during the pandemic,” the analysts said. The company reported net profits of £240 million on revenues of £519 million for the first half of its financial year last week. IGG-GB 5Y line Barclays also named the infrastructure investment company 3i Group , pharmaceutical giant AstraZeneca , food additive and chemicals giant Tate & Lyle , and mine engineering specialist Weir Group as its other favorite stocks to own.