These two FTSE 250 stocks are having an absolutely storming 2019, both climbing around 50% since the start of the year.
If you want to inject fast-paced growth stocks into your portfolio, they have been delivering it in style. I’d only buy one of them, though.
IWG (LSE: IWG), formerly called Regus, provides serviced offices, virtual offices, meeting rooms, and videoconferencing to clients. It’s a leader in what it calls the “workspace revolution” and helps more than 2.5m people and their businesses worldwide.
This morning it published its first-quarter trading statement, headlined “strong growth trend continues”, with group revenue up 10.6% to £658.3m at constant currency over the last year. First-quarter revenues were particularly strong, up 15.1% at constant currency.
IWG added 55 new locations to its global network, a net growth capital investment of £43.3m, taking the total to 3,311. This was largely due to growth in the Americas, Asia-Pacific, France, Germany and Spain, while revenues declined slightly in the UK, due to the annualised impact of network rationalisation.
The £3bn group’s net debt is £534.1m after net growth investment of £43.3m, although that will shrink after it receives £320m from a recent Japan divestment.
IWG is looking to expand by signing strategic partnerships, and says it has a good future pipeline. Today’s results were in line with expectations, but the stock has clicked up just 0.12%. Perhaps markets were hoping for more, to justify its recent share price surge.
Given recent growth, I wasn’t surprised to see the stock trading at a pricey 29.1 times earnings. However, this is forecast to fall to just 18.1% this year as earnings have continued to grow strongly, and 16.3% in 2020. By then the yield should be 3%. So you are getting rising income as well as growth.
IWG has been volatile in the past, issuing a profit warning in 2017, which it blamed on weakness in London and natural disasters in overseas markets. Despite that, it still looks like a big potential growth story, as it has a massive potential market to aim at.
Fellow FTSE 250 member Inmarsat (LSE: ISAT) describes itself as “the world’s only provider of satellite connectivity to the whole aircraft”, offering both in-flight connectivity for passengers and advanced operational safety systems in the cockpit.
Its share price is certainly flying, although again, after a hugely turbulent spell. The former stock market darling ended 2015 at 1,140p, only to crash as low as 340p, as earnings slid and profits halved. As if that wasn’t enough, net debt climbed from $1.9bn to $2.18bn over the same period.
Over and out
Today, Inmarsat reported a tiny uptick in first-quarter group revenues, up 0.4% to £346.9m, although growth was stronger in its Government and Aviation segments. CEO Rupert Pearce praised a strong underlying performance and positive momentum. However, EBITDA fell 12.9% to $152.4m.
These figures don’t excite and the share price growth has been driven by a $3.4bn takeover bid from Canadian private equity company Triton Bidco. This is due to complete in Q4 subject to shareholder and regulatory approval, and despite market noise about competing bids, I wouldn’t buy it now. I’d take a good close look at IWG, though.