2 FTSE 250 growth shares that could make you rich

Bilaal Mohamed thinks these FTSE 250 (INDEXFTSE:MCX) firms will continue to deliver spectacular share price gains.

| 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.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

After I last recommended JD Sports Fashion (LSE: JD) in March, the company’s share price went gone on to reach new all-time highs and deliver an astonishing 13-fold increase in just five years. But in more recent months, the shares have suffered a remarkable turn of fortune, shedding more than a fifth of their value since May. With many popular high street retailers currently in a slump, could this be the perfect time to sell up?

Rapid expansion

The Lancashire-based retailer and distributor of branded sportswear and fashionwear, today reported another record result for the half year. Pre-tax profits soared by a further 33% to £102.7m, compared to the £77.4m posted for the first six months of 2016/17. Total group revenue came in at £1.4bn, a 41% improvement on the £971m achieved a year earlier. The news sent the shares soaring 9% higher by late afternoon.

The FTSE 250 group now boasts more than 1,200 stores worldwide and still continues to expand rapidly. During the 26-week period to July there was a net increase of 40 JD stores, of which 12 were in the UK and Ireland, with a further 23 in mainland Europe. A similar number of net new stores is expected across mainland Europe in the second half. Further afield, the group opened its first stores in Australia and added two more in Malaysia.

Bucking the trend

The business’s robust performance of late seems to be bucking the trend among high street retailers, and I have no reason to believe this won’t continue. So far in the second half, trading has continued at similar levels to the first six months, and the group now expects year-end sales figures to be towards the upper end of market expectations, currently in the range £268m-£290m.

I see the recent share price slump as an opportunity to buy at a very opportune moment, with the shares now trading at a very reasonable 15 times earnings, falling to 14 times next year.

Partner of choice

Another London-listed mid-cap firm that I believe has excellent growth potential is UDG Healthcare (LSE: UDG). Over the years, the Dublin-based healthcare services provider has grown to become a leading partner of choice for the global healthcare industry, delivering commercial, clinical, communications, and packaging services wordwide.

The group continues to expand its footprint having committed no less than $200m since the start of the financial year to the acquisitions of STEM, Sellxpert, Vynamic, Cambridge BioMarketing and a US packaging facility. A strong balance sheet should leave it well positioned to continue with this acquisition strategy and deliver further growth.

UDG’s shares have performed well since I last recommended them(also in March), gaining around 20%. But even at a lofty 31 times earnings I believe they still represent good value given the prospects for further long-term growth.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Bilaal Mohamed has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Investing Articles

Empty Stocks and Shares ISA? I’d snap up these 3 stocks to start with!

Sumayya Mansoor explains how she would start to build wealth from scratch with an empty Stocks and Shares ISA and…

Read more »

Concept of two young professional men looking at a screen in a technological data centre
Investing Articles

7.7% yield and going cheap! Why is this unknown FTSE 250 stock flying?

It's no household name, but there's one FTSE 250 stock with a high dividend yield and booming profits that looks…

Read more »

Photo of a man going through financial problems
Investing Articles

I’d stop staring at the Nvidia share price and buy this FTSE 100 stock instead

This writer reckons there is a smarter way to invest in Nvidia today without taking on stock-specific risk. Here is…

Read more »

Young lady working from home office during coronavirus pandemic.
Top Stocks

5 stocks that Fools have been buying!

Our Foolish freelancers are putting their money where their mouths are and buying these stocks in recent weeks.

Read more »

Young Asian man drinking coffee at home and looking at his phone
Dividend Shares

These 3 FTSE 250 stocks offer me the highest dividend yields, but should I buy?

Jon Smith considers FTSE 250 shares with a very high yield, but questions whether the income is going to be…

Read more »

View of Tower Bridge in Autumn
Investing Articles

Is FTSE 100 takeover target DS Smith a great buy?

A mega-merger between FTSE 100 giants DS Smith and Mondi has the City abuzz. But is there any value in…

Read more »

Young Black man sat in front of laptop while wearing headphones
Investing Articles

The WPP share price dips as profits fall. Here’s why it could be a top dividend buy

I'm starting to think the WPP share price undervalues the stock, especially if the long-term dividend outlook comes good.

Read more »

Black father and two young daughters dancing at home
Investing Articles

A £3K investment buys me 632 shares in 2 stocks for a second income!

This Fool explains how a second income is possible through dividend-paying stocks and details two picks that could help her.

Read more »