3 FTSE 250 stocks I think could soar into the FTSE 100 index in 2021

From a national institution to a worldwide veterinarian favourite, here are 3 FTSE 250 stocks this Fool thinks could gatecrash the FTSE 100 index this year.

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I’m looking today at mid-cap FTSE 250 stocks I think could have the potential to move up into the elite FTSE 100 index. For this to happen, a company’s market capitalisation (share price multiplied by its number of shares in issue) has to pass a certain threshold. Typically, this requires a strong rise in the share price.

The FTSE bods look at the indexes every three months to see if any changes are needed. Right now, there are three FTSE 250 stocks I think have prospects of being promoted to the FTSE 100 during the course of 2021.

ITV (LSE: ITV) will be familiar to most readers. Medical devices group ConvaTec (LSE: CTEC) and veterinary drugs firm Dechra Pharmaceuticals (LSE: DPH) will probably be less familiar.

Blue-chip bounce back

ITV had been a longstanding member of the FTSE 100 before crashing out in last September’s review. Having started 2020 at 150p, the ITV share price had slumped to 57p by the review date.

The Covid-19 pandemic hit the company hard. Shuttered studios and a slump in advertising meant its two main sources of revenue plummeted. However, investors have turned cautiously optimistic since September. We’ve seen a revival in the share price to a current 107p.

As vaccines are rolled out, production and advertising should begin to recover. If this happens, I wouldn’t be surprised to see the ITV share price continue to head back towards 150p. And the company return to the FTSE 100 index.

Of course, if the vaccines rollout doesn’t carry through to a recovery in production and advertising, the ITV share price may not rise.

A lurking FTSE 250 stock

The ConvaTec share price ended 2020 in the same 200p area as it started the year. Mind, it was a volatile journey. The shares briefly went sub-150p in the spring market crash. At today’s 202p, the company lurks outside the FTSE 100.

ConvaTec is a global medical devices group focused on therapies for the management of chronic conditions. The increasing prevalence of such conditions provides a tailwind for the company.

After wholesale boardroom changes a couple of years ago, management is making good progress towards realising ConvaTec’s full potential for profitable growth. Provided progress continues, I think the company could potentially make it into the FTSE 100 index this year.

But this may not happen if progress stalls. For example, by poor execution of the strategy for profitable growth.

Another FTSE 250 stock in contention

The Dechra Pharmaceuticals share price ended 2020 some 17% higher than it started the year. And it’s still rising. At  3,690p, it’s up 7% so far in 2021. After the strong performance, Dechra’s joined ConvaTec within shouting distance of the FTSE 100.

According to the company, the majority of its veterinary products (sold worldwide) are used to treat medical conditions for which there’s no other effective solution. Or have a clinical or dosing advantage over competitor products. The company is growing fast, both organically and by acquisitions.

Dechra’s chief executive has steered the firm for 20 years. Provided he continues to increase the value of the business — and the share price follows suit — I think this is another FTSE 250 stock that could potentially ascend to the FTSE 100 before the year is out.

There’s always risk though, including that Dechra could make a value-destroying, rather than value-enhancing, acquisition. In which case, the share price could fall rather than rise.

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.

G A Chester has no position in any of the shares mentioned. The Motley Fool UK has recommended ITV. 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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