Three Undiscovered European Mid-Caps Poised for Growth

The European mid-cap universe has long been a treasure trove of overlooked opportunities, especially in sectors with structural tailwinds. As geopolitical shifts, technological innovation, and regulatory changes reshape industries, a handful of underfollowed companies are positioning themselves for outsized gains in 2025. Here are three mid-caps with robust balance sheets, idiosyncratic growth catalysts, and sectors riding powerful trends—yet still flying under the radar of most investors.

1. Coats Group (LSE: COA): Stitching Together Growth in Industrial Thread

Sector: Industrial thread manufacturing (apparel, footwear, performance materials).
Market Cap: £1.5 billion.

Coats Group, a British multinational with a 200-year history, is a niche player in the global thread and technical fabrics market. While its operations may seem mundane, the company is executing a smart pivot to focus on high-margin segments. In early 2025, it announced plans to exit its unprofitable U.S. Yarns business, freeing up capital to invest in its core apparel and industrial markets.

Why Now?
- Tailwind: Rising demand for sustainable materials and automation in manufacturing. Coats supplies threads for advanced textiles used in electric vehicle batteries, aerospace, and medical devices.
- Balance Sheet: Gross profit margins hit 36.3% in 2024, and organic revenue grew 4% year-to-date in 2025.
- Catalyst: Share buybacks and insider purchases signal confidence. CEO John Hooker bought £250,000 of shares in Q1 2025.

Investment Takeaway: A contrarian play on industrial resilience. With a P/E of just 12x 2025 estimates, it's cheap for a company with 21% projected earnings growth.

2. Morgan Advanced Materials (LSE: MGAM): Powering Tech Infrastructure with Thermal Innovation

Sector: Advanced materials for thermal management and carbon composites.
Market Cap: £1.04 billion.

Morgan Advanced Materials is a specialist in high-performance materials used in everything from semiconductors to aerospace. Its products enable cooling systems in data centers, carbon composites for electric vehicle batteries, and ceramics for industrial machinery.

Why Now?
- Tailwind: The AI revolution is a goldmine for thermal management. Data centers require advanced cooling systems to handle compute loads, and Morgan's Power Systems division is a key supplier.
- Balance Sheet: Gross margins of 44% (thermal division) and 30% (performance carbon division) ensure profitability. Net debt/EBITDA is a conservative 0.8x.
- Catalyst: A 22% earnings growth forecast for 2025, driven by orders from European semiconductor manufacturers and EV battery producers.

Investment Takeaway: A play on the AI infrastructure boom. With a P/E of 15x and a 3.5% dividend yield, it offers both growth and income.

3. Xvivo Perfusion (OM: XVIVO): Preserving Life in the Organ Transplant Revolution

Sector: Medical technology for organ preservation and transplantation.
Market Cap: SEK 8.79 billion (~$750 million).

Xvivo's ExVive System is a game-changer in organ transplantation. Its technology extends the lifespan of donated lungs and kidneys outside the human body, enabling longer transport times and more transplants. With global organ shortages worsening, Xvivo's tech is a critical enabler of healthcare innovation.

Why Now?
- Tailwind: The organ transplantation market is projected to grow 8% annually through 2030, driven by aging populations and advances in regenerative medicine.
- Balance Sheet: Gross margins of 75% on its Thoracic division (its largest revenue stream). Q1 2025 sales rose 17% YoY to SEK 219 million.
- Catalyst: A pending FDA approval for its kidney preservation system could unlock the U.S. market, which accounts for 40% of global organ transplants.

Investment Takeaway: A high-risk, high-reward bet on healthcare innovation. While its net loss in Q1 2025 (SEK 12.4 million) raises concerns about scalability, the 48% earnings growth forecast for 2025 suggests a compelling upside.

Why These Companies Are Undervalued—and Why That's About to Change

All three companies share a common theme: they operate in underappreciated niches with sector-specific catalysts but lack the analyst coverage that drives momentum. For instance:
- Coats Group is overlooked because its business sounds “old economy,” yet its materials are critical to EV and aerospace supply chains.
- Morgan Advanced Materials is a one-stop shop for tech infrastructure but flies under the radar compared to U.S. peers like 3M.
- Xvivo is a pure-play on organ preservation, a space that's still niche but primed for growth.

Investment Thesis

These companies are classic examples of “value in obscurity.” Their strong balance sheets (low debt, high margins) and sector tailwinds (AI, healthcare, industrial modernization) suggest they're undervalued relative to their growth potential.

Action Items:
1. Coats Group: Buy on dips below £12.50 (current price £13.20).
2. Morgan Advanced Materials: Accumulate near £3.80 (current price £4.00).
3. Xvivo Perfusion: Wait for FDA news (expected Q3 2025), then look for a pullback to SEK 100 (current price SEK 115).

Final Word

In 2025, the winners are the companies that solve real-world problems in overlooked markets. Coats, Morgan, and Xvivo fit the bill—offering exposure to AI infrastructure, healthcare innovation, and industrial resilience. With low analyst coverage and high growth visibility, they're set to climb out of obscurity—and into investors' portfolios.