Can these February FTSE 250 high-flyers keep on soaring in March?

February has been a great month for the FTSE 250 (INDEXFTSE:MCX), and March is already looking good for further gains.

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The FTSE 250 index gained 3.4% in February, beating the 2.3% gain of the FTSE 100. But will that outperformance continue into March? Here are two shares that could keep on going.

Plastic fantastic

Shares in Essentra (LSE: ESNT) soared by 33% in February, for the biggest gain in the FTSE 250 — and at 535p as I write, they’ve put on another couple of pennies since the start of March.

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Essentra isn’t a flash new growth star that’s excited the punters, it’s a supplier of specialist plastic, fibre, foam and packaging products that’s turning itself around from a poor 2016. The firm reported a 9% fall in like-for-like revenue, with adjusted EPS falling by 31% to 36.3p and net debt rising slightly to £379m.

But the dividend was maintained, which cheered those shareholders who had been fearing a cut. The disposal of the firm’s Porous Technologies business should complete in the current quarter to significantly reduce debt, and Essentra told us its turnaround plan is “already initiated, focusing on re-establishing stability and accountability“.

There’s a new chief executive, Paul Forman, at the helm now, and I like to see that in a company needing serious remedial work — a new boss can potentially sweep cleaner than an incumbent without being blamed for the past. In fact, Mr Forman described Essentra’s 2016 problems as being “predominantly self-inflicted, and therefore capable of reversal“.

The recovery won’t be immediate, and Mr Forman anticipates a further fall in revenue and operating profit in 2017. But analysts already have a 14% EPS recovery pencilled-in for 2018, putting the shares on a forward P/E of just under 18.

With those retained dividends (yielding around 4%) lending support and debt set to fall, I think February’s gains could presage a strong recovery for Essentra over the next few years.

Hot metal

Results for 2016 gave Bodycote (LSE: BOY) a boost on 28 February, helping send the shares up 19% over the month — and with a small extra gain since, they’re up 38% in three months to 817p.

Results from the metallurgical services specialist showed headline pre-tax profit (excluding exceptionals) falling by 2.2% to £97m, with headline EPS dropping 6.3% to 37p, and net cash plunging from £12.3m to just £1.1m. So why was the market so enthused?

For one thing, the dividend was lifted by 4.6% to 15.8p — that’s only a yield of around 2%, but it’s more than adequately covered at around 2.3 times, and it lends support to analysts who are forecasting further rises this year and next.

Another factor that seems to be playing its part is the cyclical nature of the engineering sector in which Bodycote provides its services. A strong ‘Buy’ consensus for Bodycote from analysts, combined with improving sentiment towards our major aerospace and defence companies, suggests we’re getting past the bottom of the cycle and could be in for a new bull phase.

Chief executive Stephen Harris said: “While our business, by its nature, has limited forward visibility, we continue to demonstrate that we are capable of adapting with great agility to changes in market conditions,” adding that he believes the company will “will generate good returns through the cycle“.

I confess I’m a little nervous about Bodycote’s forward P/E going into 2017 of over 20 with dividends only expected to yield around 2.5%. But if the turnaround is here and Bodycote’s agility is as great as Mr Harris suggests, the shares could be good value.

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