Here are 3 fast-growing FTSE 250 stocks. Would I buy them?

These FTSE 250 stocks just reported robust trading updates, even though the broader economy is slowing down. Are they good buys now?

| 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.

Business development to success and FTSE 100 250 350 growth concept.

Image source: Getty Images

Three FTSE 250 stocks caught my attention today after they reported their trading updates. These are particularly heartening at a time when the latest UK economy update is weak. But can these stocks continue to perform considering the evolving recovery scenario? Let’s consider them one at a time. 

#1. Dunelm: sales keep rising

The FTSE 250 homewares retailer Dunelm (LSE: DNLM) just reported an 8% increase in sales compared to the year before for the 13 weeks ending 25 September. Sales growth has corrected significantly from last year, but then that was an exceptional period for the retailer. Compared to the same time in 2019, which is the last pre-pandemic period, the company has actually seen a massive 48% increase. 

5 Stocks For Trying To Build Wealth After 50

One notable billionaire made 99% of his current wealth after his 50th birthday. And here at The Motley Fool, we believe it is NEVER too late to start trying to build your fortune in the stock market. Our expert Motley Fool analyst team have shortlisted 5 companies that they believe could be a great fit for investors aged 50+ trying to build long-term, diversified portfolios.

Click here to claim your free copy now!

I think this is encouraging, but at the same time there are risks to the stock as well. One of them is its already slightly high price-to-earnings ratio of around 21 times. With a softening in sales growth from last year, I am not sure how far this is sustainable, especially when it is facing cost pressures due to freight and driver shortages. I think its share price can potentially rise further, but just to be sure I would wait for its next set of full results before buying the stock (or not).

#2. Dominos: expansion underway

Pizza delivery company Dominos (LSE: DOM) also reported a healthy trading update, with an almost 10% increase in sale for the 13 weeks ending 26 September. It also opened 18 new stores in the UK & Ireland and is also recruiting 8,000 people now. This bodes well, especially since its revenues declined for its full financial year ending 27 June. 

Its challenges are the same as those of Dunelm. The company has just said that it’s facing inflationary pressures, because of the lack of availability of labour as well as rising food costs. At the same time, its P/E is around 19 times, which is not low either. However, I think that going by its long-term share price trend, its established popularity, and its ability to be profitable year after year, I am positive about it. I have already bought the stock. 

#3. Hays: hiring picks up speed

Recruiter Hays (LSE: HAS) is up by almost 3% today after releasing its trading update earlier today. The company reported 41% increase in net fees for the quarter ending 30 September compared to the year before. While the economic recovery has quite likely opened up demand for jobs, it is not just the quantity increase at play here. Hays also reports wage inflation at higher salary levels. 

It expects to continue with strong growth, but there are risks to this recovery stock as well. First, recovery may slow down more. There is already increasing proof of that in the UK’s economy, for instance. Neither high employment nor rising wages are sustainable in a weak economy. And Hays’ P/E ratio has already run up to a huge 45 times. In this instance as well, I would wait for its full set of results to assess how much its share price could rise further.

One FTSE “Snowball Stock” With Runaway Revenues

Looking for new share ideas?

Grab this FREE report now.

Inside, you discover one FTSE company with a runaway snowball of profits.

From 2015-2019…

  • Revenues increased 38.6%.
  • Its net income went up 19.7 times!
  • Since 2012, revenues from regular users have almost DOUBLED

The opportunity here really is astounding.

In fact, one of its own board members recently snapped up 25,000 shares using their own money...

So why sit on the side lines a minute longer?

You could have the full details on this company right now.

Grab your free report – while it’s online.

Manika Premsingh owns shares of Dominos Pizza. The Motley Fool UK has recommended Dominos Pizza. 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

Thoughtful anxious asian business woman looking away thinking solving problem
Investing Articles

3 UK shares to buy in a stock market crash

Inflation and rising interest rates have our author on the lookout for a stock market crash. Here’s what he’s looking…

Read more »

Buffett at the BRK AGM
Investing Articles

3 Warren Buffett techniques to build my wealth

Our writer shares a trio of Warren Buffett investing habits he hopes can help him build his own wealth.

Read more »

Futuristic front of NIO car in Norwegian showroom
Investing Articles

Down over 50%, is NIO stock the best EV pick right now?

NIO stock has dipped over 50% in the past year. Does this create the perfect opportunity to buy or are…

Read more »

happy senior couple using a laptop in their living room to look at their financial budgets
Investing Articles

Aviva shares are in demand. Should I buy too?

Hargreaves Lansdown investors were piling into Aviva shares last week. This Fool is asking whether he should join the queue.

Read more »

A pastel colored growing graph with rising rocket.
Investing Articles

3 reasons why I think the IAG share price could rally this year

Jon Smith writes about how improving risk sentiment could help the IAG share price this year, but not without risks…

Read more »

Passive and Active: text from letters of the wooden alphabet on a green chalk board
Investing Articles

A passive income stock I’ve bought to supercharge my wealth!

I think this UK dividend stock is one of the best to buy for healthy long-term passive income. Here's why…

Read more »

British Pennies on a Pound Note
Investing Articles

3 hot penny stocks I’m buying in June!

With their exciting growth potential, penny stocks can be great investments. I've found three to buy next month based on…

Read more »

Passive income text with pin graph chart on business table
Investing Articles

2 green dividend shares I’d buy with £500

Jon Smith explains two dividend shares with a focus on renewable energy that have caught his eye at the moment.

Read more »