2 FTSE 250 stocks I’d buy today for growth and value

These two FTSE 250 stocks have the potential to deliver substantial growth and also represent great value, says Fool Noah Riley.

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The market has been split recently, with many investors advocating buying into growth shares and others arguing that value shares offer the best long-term potential. This has created significant uncertainty surrounding the future of the market. I have identified two FTSE 250 companies that I think tick both the growth and value boxes, and am considering for my own portfolio.

Cranswick offers a good opportunity  

FTSE 250 food producer Cranswick (LSE: CWK) has had a relatively stagnant year compared to its long-term history of growth. This price consolidation could offer an excellent entry point in my opinion.

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Cranswick is a highly diversified food producer with a portfolio spanning poultry, pork, convenience foods and gourmet products. In 2019 Cranswick continued to diversify, acquiring three companies that expanded its non-meat offerings, increasingly reflecting consumers’ changing consumption habits. The company is a strong cash generator, focusing on efficiency and supply chain management.

Cranswick sources much of its food from its own fully-owned farms. By doing this Cranswick is able to keep a tight control on costs and improve margins while delivering ‘farm to fork’ quality control. It also gives the company long-term sustainability as Cranswick remains in control of the whole supply chain, reducing the risk of disruptions.

Due to its increasingly diverse revenues and well-managed operations, Cranswick has delivered 30 consecutive years of dividend growth, creating substantial shareholder value. This has been achieved through the company’s incredible top-line revenue performance, which continued into 2020. Considering this strong sales growth combined with a solid dividend yield, a P/E of about 20x makes for an attractive entry price which I am considering acting on for my own portfolio.

Another great FTSE 250 share

Premier Foods (LSE: PFD) owns some of Britain’s best loved food brands, including Mr Kipling cakes, Bird’s custard and Oxo stock cubes. These household staples underpin a solid FTSE 250 business that has a consistent history of delivering revenue growth.

2020 looks like a record sales year for the company as it has benefited from a UK lockdown-driven spike in demand. Previous headwinds have been overcome, with a definitive pension agreement set to save the company £115m to £145m in potential deficit contributions.

The company has also reduced its net debt by £40m to £429m over the past year. This reduction has de-leveraged the company’s balance sheet, bringing down the net debt/EBITDA ratio to 2.7x, ahead of the previously stated target of 3x announced back in 2017.

The past two to three years have also seen a major restructuring of the company and this has delivered a sizeable positive impact to company profits. Following these changes, Premier Foods looks set to combine solid revenue growth with consistently improving earnings. At a P/E of about 11x, this is a share that I am eyeing up for a long-term investment.

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Noah Riley holds no positions in any of the 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.

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