3 stocks tipped for the FTSE 250. Would I buy?

Auction Technology Group (LON:ATG), Trustpilot Group (LON: TRST), and Volution Group (LON:FAN) are FTSE 250 contenders that I’d consider buying shares in.

| More on:

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.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

The FTSE Russell issues a quarterly report outlining the next shuffle of the FTSE indices. In its June report it tips Auction Technology Group (LSE:ATG), Moonpig Group, Renishaw, Trustpilot Group, Tyman and Volution Group (LSE:FAN) as potential additions to the FTSE 250 index. It also slates Royal Mail as the likely contender to replace Renishaw in the FTSE 100.

Curated auction leader

The Auction Technology Group is the world’s leading curated auction marketplace provider. Over 2,000 auction houses use its technology and £6bn worth of items are sold each year. It launched on the London Stock Exchange via an initial public offering (IPO) in February and its share price has soared.

ATG supports existing auction houses by offering software, design and e-commerce solutions. It also runs the well-known auction sites i-bidder.com and BidSpotter. Furthermore, it has an antiques trade magazine and several additional marketplaces. I think the digital art craze for non-fungible tokens (NFTs) is renewing interest in auctions. Plus the stay-at-home economy has boosted revenues. In fact, group revenues rose 48% to £34.5m in the half year to the end of March. 

The ATG share price is up 45% since IPO. The company has a £1.1bn market cap and, as mentioned, is now in the running to join the FTSE 250. There’s a risk the reopening could reduce interest, but with a clear shift to e-commerce I feel bullish on the sector. I’d happily buy shares in ATG today.

Reviews giant

Another FTSE 250 contender is online review site, Trustpilot Group, was founded in Denmark in 2007 and launched via an IPO in March.

The Trustpilot share price has risen 20% since IPO and it now has a £1.3bn market cap.

It invests in its technology and big-data ecosystem to enhance ease of use for both users and clients. The site mission is to be open and collaborative, and it’s popular with consumers for providing unbiased website reviews It removed 2.2m fake reviews last year). The company makes money from paid products and services. The hook for businesses is they get an element of marketing and enhanced credibility for the business.

Keeping on top of fake reviews and ensuring a high level of trust is key for its ongoing success. Nevertheless, I think this looks like a great business and I’d consider buying Trustpilot shares, FTSE 250 member or not.

Ventilation specialist

Ventilation specialist Volution Group operates internationally. It sells its extractor fans and installations to consumers and businesses. The UK accounts for half its business, with Europe and Australia making up the rest.

Following the M&A roadmap to scale is a clear priority for Volution. For now, it sees many opportunities in the UK and Continental Europe, but doesn’t rule out considering North American prospects in the future.

So far, it’s financed its deals from its own cash generation. But it has noted it may move into issuing equity for future acquisitions. This could lead to share price dilution, so I imagine market reaction would depend on the quality and size of acquisition.

Commodity pricing pressures are another issue that could cause share price volatility for the group. Nevertheless, I like the outlook for this business. After the pandemic, demand for ventilation appears to be rising. It’s the same new territories as climate change raises temperatures. I’d consider adding Volution Group shares to my Stocks and Shares ISA.

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.

Kirsteen 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.

More on Investing Articles

Investing Articles

Here’s how investing £250 a month could bag me over £10K in passive income annually

This Fool breaks down how she would go about building a passive income stream worth over £10,000 annually to enjoy…

Read more »

Young black colleagues high-fiving each other at work
Investing Articles

I’d snap this FTSE 250 stock up in a heartbeat for juicy returns and growth!

Sumayya Mansoor explains why this FTSE 250 property stock is firmly on her radar as she looks to buy stocks…

Read more »

Man writing 'now' having crossed out 'later', 'tomorrow' and 'next week'
Investing Articles

1 dirt-cheap FTSE 100 stock investors should consider buying in June

The FTSE 100 is littered with bargains, according to our writer. She explains why investors should be taking a closer…

Read more »

Young female business analyst looking at a graph chart while working from home
Investing Articles

The Legal & General share price has gone nowhere. Why?

The Legal & General share price has performed much worse than the the FTSE 100 over the past five years.…

Read more »

Investing Articles

Where will the BT share price go in the next 12 months? Here’s what the experts say

The BT share price has been sliding for years. But after the latest set of results, it looks like the…

Read more »

Investing Articles

Are National Grid shares now a brilliant bargain?

National Grid shares look exceptionally cheap following last week's selloff. Is now the time to buy the FTSE 100 firm…

Read more »

Happy young female stock-picker in a cafe
Investing Articles

Up more than 15%! — this small-cap company is delivering phenomenal dividend growth

There’s more good news in this company’s interim report and it may be shaping up as a decent dividend growth…

Read more »

Electric cars charging at a charging station
Investing Articles

Big news for Tesla stock investors!

Tesla has just quietly dropped a key target it set for itself just a few years ago. What does this…

Read more »