Many FTSE 250 stocks have fallen in recent months due to ongoing economic volatility. Could there be some bargains to pick up for my holdings? One stock I want to take a closer look at is Integrafin Holdings (LSE:IHP). Should I buy or avoid the shares?
Financial services technology
As an introduction, Integrafin is the holding company behind Transact. Transact is a financial services technology platform. It offers financial services professionals, such as financial advisers, what is known as a wrap-around platform to help them and their clients manage investments and other financial aspects including taxation, and record keeping.
So what’s happening with Integrafin shares currently? Well, as I write, they’re trading for 229p. At this time last year, the stock was trading for 492p. This equates to a 53% decline over a 12-month period.
To buy or not to buy?
Let’s take a look at some of the pros and cons of me buying Integrafin shares.
FOR: Reviewing Integrafin’s fundamentals, I can see it has a great track record of performance growth. I do understand that past performance is not a guarantee of the future. However, looking back, it has grown revenue and profit for the past four years consecutively. In fact, revenue has increased at a compound rate of 12% annually in this period. In addition to this, the shares would boost my passive income stream through dividends with a dividend yield of 4.5% currently. This is higher than the FTSE 250 average of 1.9%. I do understand that dividends are never guaranteed, however.
AGAINST: One of the biggest risks Integrafin faces in my opinion is that of competition. There are a few well-known platforms out there that do the same thing as its Transact platform. The main one that springs to mind is Hargreaves Lansdown, which has brand power and offers a direct-to-consumer offering as well as to the professionals in the finance industry.
FOR: Looking at the wealth management market in the UK, it seems to be growing at a nice rate. This could benefit Integrafin and the take up of its platform. In turn, this could boost performance and shareholder returns. Finally, the shares look decent value for money on a price-to-earnings ratio of 13 currently.
AGAINST: Economic volatility due to soaring inflation, coupled with the tragic events in Ukraine, have pegged back many financial services shares, including Integrafin. This continued volatility, including rising interest rates, as well as negative market movements for certain assets and their prices, could affect Integrafin for some time to come. This is an issue I will keep a close eye on.
A FTSE 250 stock I would buy
Taking everything into account, I believe Integrafin is the type of stock I have been looking for. It is a quality business, operating in a sector primed for longer-term growth. Furthermore, after its recent share price drop, it is trading at a decent discount compared to some months ago. The passive income opportunity also helps me build my investment case. I am adding Integrafin to my buy list.
