2 FTSE 250 growth stocks I’d buy for my ISA

Adding FTSE 250 (INDEXFTSE: MCX) growth stocks to an ISA could be a good long-term strategy, explains Edward Sheldon.

| 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.

An allocation to FTSE 250 stocks within an ISA is a good idea, in my opinion, as the index is home to a number of companies that are growing quickly, and generating big gains for investors.

With that in mind, here’s a look at two growth stocks within the index that I like the look of right now.

JD Sports Fashion

The UK high street may be on life support, yet one retailer that still has considerable potential, in my view, is JD Sports Fashion (LSE: JD). I believe the £3.4bn market-cap is a great way to get exposure to some of the world’s largest sports brands such as Nike and Adidas, and also capitalise on the athleisure wear trend that has surged in popularity across the world in recent years.

In a January trading update, JD announced that it had maintained its positive performance from the first half of the year, and that it was pleased with the continuing momentum of its international business. The company also advised that pre-tax profit for the year will hit the £300m mark, up from previous estimates of £270m-£295m.

After a strong share price run between early 2015 and May 2017, they pulled back last year and, at the current price, I believe they offer value. With City analysts expecting earnings of 23.5p per share for the year ending 28 January 2019, the forward-looking P/E ratio of the stock is a very reasonable 13.7. JD Sports Fashion has considerable ISA potential, in my opinion.

Sanne Group

The next stock I’m profiling, Sanne Group (LSE: SNN), is less well known. But don’t let that put you off – the company has been a fantastic performer for investors over the last three years, and appears to have plenty of potential for further gains.

Sanne provides outsourced administration, reporting and fiduciary services to asset managers, financial institutions, family offices and corporates. This is perhaps not the most exciting business model in the world, yet the company is benefiting from strong demand for its services as a result of increased regulation requirements, cross-border investment and the growing expectation for independent oversight.

Through both acquisitions and organic growth, Sanne has enjoyed powerful growth since coming to the market in April 2015. And this morning’s full-year results for FY2017 look excellent.

Indeed, for the year ending 31 December, group revenue increased 77% to £113.2m, including organic growth of 14%, and underlying profit before tax surged 79% to £38.1m. Underlying diluted EPS climbed from 16.9p to 23.7p and the full-year dividend was hiked over 30% to 12.6p.

Chairman Rupert Robson was upbeat on the outlook for the company, commenting: “Looking forward we are building on our success as a high growth sustainable business whilst investing in our infrastructure. Against this background, the outlook for 2018 continues to look promising.”

Like many stocks across the market, Sanne shares have pulled back this year, falling from 800p in early January to 675p today. As such, with the forward P/E ratio having fallen to 26, I believe the shares are now worth a closer look.

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.

Edward Sheldon owns shares in JD Sports Fashion. 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

Smiling white woman holding iPhone with Airpods in ear
Investing Articles

A brilliantly reliable FTSE 100 share I plan to never sell!

This FTSE-quoted share has raised dividends for more than 30 years on the spin! Here's why I plan to hold…

Read more »

Asian man looking concerned while studying paperwork at his desk in an office
Investing Articles

This 7.7% yielding FTSE 250 stock is up 24% in a year! Have I missed the boat?

When a stock surges, sometimes it can be too late to buy shares and capitalise. Is that the case with…

Read more »

Investing Articles

£13,200 invested in this defensive stock bags me £1K of passive income!

Building a passive income stream is possible and this Fool breaks down one investment in a single stock that could…

Read more »

Investing Articles

I think the Rolls-Royce dividend is coming back – but when?

The Rolls-Royce dividend disappeared in 2020 and has not come back. But with the company performance improving, might it reappear?

Read more »

British Pennies on a Pound Note
Investing Articles

Should I snap up this penny share in March?

Our writer is considering penny shares to buy for his portfolio next month. Does this mining company merit a place…

Read more »

Silhouette of a bull standing on top of a landscape with the sun setting behind it
Investing Articles

Stock market bubble – or start of a bull run?

Christopher Ruane considers whether the surging NVIDIA share price could be symptomatic of a wider stock market bubble forming.

Read more »

Investing Articles

Buying 8,254 Aviva shares in an empty ISA would give me a £1,370 income in year one

Harvey Jones is tempted to add Aviva shares to his Stocks and Shares ISA this year. Today’s 7.37% yield isn't…

Read more »

Investing Articles

Is the tide turning for bank shares?

Bank shares are trading on stubbornly cheap-looking valuations yet business performance in the sector is broadly robust. Should our writer…

Read more »