I think some of the market’s best growth stocks can be found in the FTSE 250. And with that being the case, I’ve recently been combing through the index, searching for businesses to add to my portfolio with attractive growth prospects.
Here are three companies I would buy for my portfolio today.
FTSE 250 homebuilder
The first company on my list is homebuilder Bellway (LSE: BWY).
The UK housebuilding sector is currently benefiting from significant tailwinds, and Bellway is capitalising on this growth. According to its interim results, the group produced a record 5,656 properties in its fiscal first half. Due to this record output and higher selling prices, revenue increased 11.6% year-on-year for the period.
I think low interest rates, easy credit and high demand for new properties will lead to continued growth for Bellway. That’s why I would buy this FTSE 250 company.
Some risks the business faces include higher costs. These are already having an impact. The group’s gross profit margin declined from 23.1% to 20.8% in its fiscal first quarter. If this trend continues, profits may come under further pressure.
Another company I would add to my FTSE 250 growth stocks portfolio is Clarkson (LSE: CKN).
I think this company, which is the world’s leading provider of integrated services and investment banking capabilities to the global shipping market, should register growing profits as economic growth returns.
Indeed, thanks to rising shipping rates worldwide, a sign of high demand and reduced supply, the business has made an “encouraging start” to the year. Management believes activity will continue to increase throughout the year and is expecting a significant improvement in the second half.
I would buy Clarkson as a growth play, but I also plan to keep in mind the company’s weaknesses. A sudden downturn in economic activity could send shipping rates plunging, which may lead to losses. Sectors such as shipping are usually the first to feel the pain in an economic slump.
Booming 5G market
The pandemic has really accelerated the need for efficient communication technology worldwide, which could drive increased demand for 5G connectivity. One company that may benefit from this is Spirent Communications (LSE: SPT).
Spirent produces and develops equipment for use in telecommunications networks. It is a specialist in 5G equipment and has reported growing interest in its capabilities recently.
In the company’s latest trading update, management reported that the business “continues to win in 5G with the development of 5G technology and networks.” It booked 180 5G deals in the first quarter with more than 80 customers.
Still, while Spirent might appear to be firing on all cylinders today, the technology sector is incredibly competitive. As a result, the company will need to remain at the forefront of 5G technology to maintain its market share. This is the most considerable risk the enterprise faces today. It could quickly lose customers if it doesn’t keep up with the competition.
Even after taking this risk into account, I would buy Spirent for my FTSE 250 growth stocks portfolio right now.
Rupert Hargreaves has no position 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.