One FTSE 350 growth stock I’d buy and one I’d sell

These two FTSE 350 (INDEXFTSE:NMX) shares could offer very different share price performance.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Growth shares can offer stunning share price gains. Investors seem more willing to upgrade the valuation of a stock that has fast-growing profit than for any other reason. However, finding companies which offer strong growth potential at reasonable prices can prove challenging. Here is one stock which seems to offer just that, and another which I think may be overvalued at the present time.

High valuation

Reporting on Thursday was money-saving specialist (LSE: MONY). Its trading update showed a somewhat mixed performance among its various divisions. Its Insurance segment recorded a rise in revenue in the first quarter of the calendar year of 23%, with a buoyant switching market being a key driver. However, its Money division reported a fall in revenue of 2%, which was mostly down to a lack of repeat switching deals in the current account sector versus last year.

Inflation Is Coming

Inflation is out of control, and people are running scared. But right now there’s one thing we believe Investors should avoid doing at all costs… and that’s doing nothing. That’s why we’ve put together a special report that uncovers 3 of our top UK and US share ideas to try and best hedge against inflation… and better still, we’re giving it away completely FREE today!

Click here to claim your copy now!

However, the performance of’s Home services division was disappointing. It declined by 45% as a result of a lack of an energy collective switch in the quarter. This also negatively impacted the division, where revenue declined by 4%.

Looking ahead, the firm is forecast to record a rise in its bottom line of 8% in the current year. It is due to follow this with growth of 10% next year. This indicates that the company’s performance as a business remains strong, but this may not be translated into a rising share price.

The reason for that is a valuation which appears excessive, even when its growth outlook is factored-in. The company’s shares trade on a price-to-earnings (P/E) ratio of 21.5, which suggests it may be a stock to avoid for now.

Improving performance

Also reporting on Thursday was technology components manufacturer Senior (LSE: SNR). Its trading in the period since 1 January has been in line with expectations, with an improvement anticipated in the second half of the year. That’s because of the transition from more mature aerospace programmes to the new airframe and engine products, which could lead to rising profitability in the Aerospace division later on this year.

Senior is also targeting improved operational performance as it continues with its cost reduction focus, particularly for its newer programmes. It anticipates progress from 2018 onwards, with its Aerospace and Flexonics programmes and products due to enter production.

In fact, the company’s bottom line is expected to rise by 13% in the 2018 financial year. This puts it on a price-to-earnings growth (PEG) ratio of just one, which indicates that share price growth could be ahead. With a dividend yield of 3.3% which is covered twice by profit, shareholder payouts could grow rapidly in future. At a time when inflation is rising, this may lead to improved share price performance versus the FTSE 350 in the long run.

More on Investing Articles

Lady researching stocks
Investing Articles

Here’s why I’m avoiding this dirt-cheap dividend penny stock!

A dirt-cheap, dividend-paying penny stock with a vast presence sounds good on the surface. This Fool isn't convinced, however.

Read more »

Asian Indian male white collar worker on wheelchair having video conference with his business partners
Investing Articles

These top income stocks look dirt cheap to me. I’d buy them now

I'm taking advantage of today's stock market weakness to load up on top value income stocks

Read more »

Young brown woman delighted with what she sees on her screen
Investing Articles

Excessive stock trading erodes long-term gains!

Are high trading fees eating away at your returns? Research suggests that excessive stock trading could be to blame.

Read more »

Young woman sat at laptop by a window
Investing Articles

Pearson shares are up 25% since the market correction! Should I buy now?

Why have Pearson shares rallied since the market correction? This Fool looks at the educational provider in more detail and…

Read more »

Hand of person putting wood cube block with word VALUE on wooden table
Investing Articles

Recession ready! I’d buy these FTSE 100 stocks for tough times

Jon Smith explains some of his favourite options for defensive FTSE 100 stocks that he's thinking of adding to his…

Read more »

A graph made of neon tubes in a room
Investing Articles

Down 45%, are these UK shares no-brainer bargains right now? 

Several top UK shares are down significantly and two companies on my list look like possible attractive buys right now.…

Read more »

Portrait of elderly man wearing white denim shirt and glasses looking up with hand on chin. Thoughtful senior entrepreneur, studio shot against grey background.
Investing Articles

I bought these 2 FTSE 100 shares two years ago. Should I now add to them?

Andrew Woods asks if he should add to his current holding in these two FTSE 100 shares ahead of a…

Read more »

Stack of British pound coins falling on list of share prices
Investing Articles

Has the Deliveroo share price bottomed?

The Deliveroo share price (LON:ROO) is down nearly 60% in 2022. Paul Summers asks whether it's now hit bargain territory.

Read more »