If I had to pick just one FTSE 250 stock to invest £1,000 in, I would focus my efforts on finding the market’s best growth opportunities.
I would only use this strategy alongside a more extensive, diversified portfolio. Investing all of my portfolio in just one growth stock would be a precarious strategy.
Growth stocks can produce large profits, but they can also lead to substantial losses. As such, it is usually best to own them as part of a well-diversified portfolio.
FTSE 250 growth stock
The FTSE 250 growth stock I would invest £1,000 in right now is the serviced office provider IWG (LSE: IWG).
Throughout the pandemic, it has become clear that companies no longer need large offices to get the best out of their employees. While I think there will always be a need for the office, more and more businesses are now adopting a hybrid approach. Employers are letting workers choose when to come into the office and when to stay at home.
This is having a significant impact on the office market. Large offices are being exchanged for smaller premises or more flexible solutions.
IWG owns what it calls the world’s largest flexible workspace platform. Customers can select the size of office they like and the duration. There is no need to sign lengthy and costly leases, and the amount of office space a firm can rent is flexible.
This kind of flexibility may be highly desirable in the new normal. It already seems the company is benefiting from these themes.
The FTSE 250 company recently reported that June was a record month for space sold in its US business. The firm also noted that enquiries and customer retention rates have returned to pre-pandemic levels across the operation.
The group also noted that there had been an “unprecedented demand for hybrid working.” It added 900 new enterprise customers in the first half, supplementing existing demand.
This is strong evidence that the trend for flexible working is here to stay.
To help meet what management believes will be increasing levels of activity as we advance, IWG is planning to open 84 new locations in the second half. Other new franchise agreements are also in the pipeline.
All of the above suggests IWG could experience strong growth as the trend for flexible working grows. And this is why I would invest £1,000 in the business. I think it is an excellent way to invest in the post-pandemic economic recovery.
That being said, the company’s growth is not guaranteed. The trend for flexible working may not last, and IWG could end up over-expanding in this situation. This would lump the business with an unnecessary level of debt. The group may struggle to sustain this debt in another economic downturn. Indeed, in previous downturns, the firm has come close to collapse.
Still, as a post-corona recovery play, I would buy IWG as an FTSE 250 growth investment.