Forget a Cash ISA! I’d buy these 2 bargain FTSE 250 growth stocks today

These two FTSE 250 (INDEXFTSE:MCX) shares could be undervalued in my opinion, and may offer superior returns to a Cash ISA.

Peter Stephens

Having held various senior management positions in the manufacturing sector, Peter founded his own manufacturing company in 1996. This was subsequently sold in 2007. Meanwhile, his passion for investing (which began during the privatisations of the 1980s) remains strong and he couples this with writing for The Motley Fool as a Contractor. His investment style is value-oriented; focusing on company fundamentals, as well as assessing the strength and presence of a competitive advantage. While above-average growth prospects remain very attractive, a greater focus on dividends has crept in since Peter became a part-time retiree in 2007.

Published 1 July, 2019 2:04 pm BST

| More on: FUTR

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.

The FTSE 250 may have risen by 12% in the first half of 2019, but there continue to be a number of shares that could offer good value for money.

Certainly, with the index being focused on the UK there is political and economic uncertainty facing many of its members.

But when compared to the 1.5% return on a Cash ISA that is available at the present time, now could prove to be a good time to access the growth potential of a range of mid-cap stocks.

With that in mind, here are two FTSE 250 shares that appear to offer growth at a reasonable price.

Future

Global platform for specialist media, Future (LSE: FUTR), released an encouraging trading update on Monday. It reported that the positive performance it experienced in the first half of the year has continued. As a result, it anticipates that its performance for the full year will be ahead of previous guidance.

The financial outlook of the company has been boosted by strong audience growth within its Media division. It has also seen a positive contribution from recent acquisitions, while being in the process of searching for a new CFO following a change in position to Chief Strategy Officer for the current CFO.

In the current year, Future is forecast to post a rise in earnings of 16%. Despite this strong rate of growth, the stock trades on a price-to-earnings growth (PEG) ratio of just 1.3. This suggests that it could offer good value for money, and may be able to deliver further share price growth following its 118% rise since the start of the year.

G4S

Also offering an encouraging financial outlook is FTSE 250-listed G4S (LSE: GFS). The security specialist is expected to post a rise in earnings of 12% in the current year after what has been an uncertain period for the business in recent years. Since it trades on a PEG ratio of 1, it appears to be cheap relative to many of its mid-cap peers.

The company’s recent trading update showed that is has experienced strong sales wins in recent months. It is also making progress with a separation review that has the aim of creating two separate businesses in order to unlock shareholder value. This could be a sound move for the business, and could offer greater specialism and efficiency over the long run.

As well as its growth potential, G4S also has an increasingly appealing income outlook. The stock currently yields 5% from a dividend that is covered twice by profit. This suggests that there is scope for growth in shareholder payouts, which may provide an additional boost to its total return over the long run. As such, now could be a good time to buy a slice of the stock from a value, income and growth perspective.