Investors across the UK are increasingly setting their sights high. A monthly passive income of £5,000 — equivalent to £60,000 a year — is an important psychological target, promising freedom from work and insulation from rising living costs.

At a 5% annual yield, generating £60,000 of income would require an invested portfolio of around £1.2m. This immediately reframes the challenge: passive income at this level is less about clever stock-picking and more about long-term capital accumulation.

Ambition matters. But so does arithmetic.

If someone were to max-out their Stocks and Shares ISA every year — that’s £20,000 of annual contributions — and achieve a 9.6% return on average — that’s the average Stocks and Shares ISA return over the past decade — they would surpass £1.2m within 20 years.

So, it’s achievable. The question most people are asking themselves, however, is ‘what should I invest in?’.

Investing to build wealth

The most successful investors typically use a numbers-led approach to build wealth. This means relying on data and metrics to identify undervalued stocks, not a hunch.

That’s incredibly important. Typically, equity researchers or investment banks will have vast datasets and large quantitative models. But that doesn’t mean retail investors can’t invest in the same way. The data is available for all across the internet.

One on my watchlist

One stock that is scoring well on multiple quantitive models is CommScope (NASDAQ:COMM). It’s a global supplier of infrastructure solutions for communication, data centres, and entertainment networks. Unsurprisingly, it’s been doing rather well thanks to the AI revolution.

But there’s more to unpack here. The company has been doing really well operationally this year. However, it’s in the process of selling its Connectivity and Cable Solutions (CCS) division to reduce its debt burden.

The stock currently has a market cap around $4.4bn, but has a net debt position around $6.5bn. It’s selling its CCS division for $10.5bn, although $500m will be lost in fees. The deal is in cash and expected to complete in the first few months of 2026.

So, what’s left after the sale?

Well, we’re looking at an enterprise value of $900m. In its Q3 results, the business noted that RemainCo — the internal name for the parts of CommScope that will remain after it sells its CCS division — achieved net sales of $516m — 49% above the prior year — and adjusted EBITDA of $91m.

RemainCo is expected to deliver between $350m and $375m in EBITDA for 2025 as a whole. This isn’t net income, but broadly we can see RemainCo trading around 2.5 times EBITDA for the year when adjusted for net cash. This is an EV-to-EBITDA ratio… and the sector average is a lot more than 2.5 times — it’s 14.9 times.

The issue, however, is that RemainCo is inherently more cyclical than the CCS division. This year has been a good one for RemainCo, but next year might be slower.

The maths also isn’t straightforward. There will be a special dividend following the sale, and that means the company is unlikely to be sitting on all that cash. Some will be redistributed to shareholders.

Despite this, I certainly think it’s a stock worth considering. It’s up over 300% this year, but evidence suggests it could go higher.