These FTSE 250 shares look cheap! Should I grab them before prices rise?

I’m looking for some cheap FTSE 250 growth shares to boost my portfolio. I think these two promising options are selling at bargain prices.

| More on:
happy senior couple using a laptop in their living room to look at their financial budgets

Image source: Getty Images

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.

With the UK stock market dipping in the past year, several FTSE 250 shares are now selling for less than they’re worth. But buying up value-priced shares only makes sense if the company looks likely to recover.

With that in mind, I’ve pinpointed two stocks that I think have decent potential and are currently selling at a discount. While both are related to the finance and investment industry, they operate vastly different business models.


TP ICAP (LSE:TCAP) is one of the largest intermediary brokers in London, providing trade execution and settlement services to companies around the world. The company was formed in 2016 as a merger between Tullett Prebon Group (TP) and the voice broking business ICAP.

At 180p, the TP ICAP share price isn’t particularly cheap compared to recent performance. However, it’s a long way off the early 2020 highs of 400p. Most losses since then were probably the result of Covid, so it’s not unrealistic to imagine the price could regain that level again.

Analysts estimate the shares to be trading at approximately one-third below fair value, suggesting a price of 240p to be more appropriate. This is reinforced by strong earnings growth of 54% over the past year.

Subsequently, analysts predict an average price increase of around 30% in the coming 12 months.

Notably, 74% of shares in the company are owned by institutional investors. What’s more, over 50% of the shares are owned by only seven institutions. While this gives the company strong credibility, it also leaves the share price vulnerable to the decisions of a few investors who might have difefrent priorities to smaller retail investors.

TP ICAP does pay a dividend but figures indicate that it’s not well covered by earnings. With earnings per share at 14p and a dividend paying 12.7p per share, TP ICAP’s payout ratio is 94%. If earnings decline, this can result in less reliable or infrequent payments.

MAN Group

MAN Group (LSE:EMG) is a London-based investment management firm that offers tailored solutions to high-value clients. Performance during 2023 was lacklustre, leading to some forecasters predicting subdued earnings throughout 2024.

Now at 242p, the share price has seen a 15% fall in the past year. However, in the past five years, it’s increased by over 80%. That indicates that the firm has been able to achieve consistent growth in the past, suggesting the current share price is likely lower than its fair value.

While the share price hasn’t suffered any serious volatility in the past year, negative returns of 15% are worryingly lower than the UK market average of -5.4%.

But MAN Group’s future looks brighter.

Independent analysis forecasts earnings and revenue to grow by 21% and 14% respectively, prompting an estimated future return on equity (ROE) of around 25% in three years.

Some estimates put the share price at 65% below fair value. However, MAN Group’s price-to-earnings (P/E) ratio of 15.3 is on par with similar companies in the capital markets industry. It increased from a P/E of only 8 near the beginning of the year, indicating improved earnings in the past two months.

Both TP ICAP and MAN Group are well-established firms that suffered when the economy retracted during Covid. But they seem to both have growth potential, so the current low share prices could be a good entry point for each one.

I’ll be adding both of them to my watchlist to consider buying when my next payday arrives.

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.

Mark Hartley 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

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

Investing freedom — but inside a pension

Strapped consumers might be cutting back on investing, but they’re still keeping up their pension contributions. The only problem? A…

Read more »

Mature Caucasian woman sat at a table with coffee and laptop while making notes on paper
Investing Articles

Forget gold! I’d rather buy these 3 FTSE high-yielders in a Stocks and Shares ISA

Gold looks like a risky investment to me as the price hits an all-time high. I'm ignoring the fuss to…

Read more »

Young female business analyst looking at a graph chart while working from home
Growth Shares

This 55p UK stock could rise more than 300%, according to a City broker

This UK stock has fallen from above 800p to below 60p. But analysts at Citi believe it’s capable of a…

Read more »

Businesswoman analyses profitability of working company with digital virtual screen
Investing Articles

I think this FTSE 250 trust has all the right ingredients to lock in long-term profits

Today I'm examining the prospects of a private equity investment trust on the FTSE 250 that caught my attention recently…

Read more »

Young black man looking at phone while on the London Overground
Investing Articles

2 under-the-radar UK shares investors should consider snapping up

Two UK shares have caught the eye of our writer. She explains why investors should be taking a closer look…

Read more »

Investing Articles

Are these 2 ultra-high-yielding income stocks a good buy for me?

These two income stocks often split the debate amongst investors. So what does our writer think of them as potential…

Read more »

Senior woman potting plant in garden at home
Investing Articles

5% yield! This dividend stock could be great for my retirement

Our writer explains why this dividend stock appeals to her as she’s investing to build wealth to enjoy in the…

Read more »

A young Asian woman holding up her index finger
Investing Articles

I’d aim for a second income of £1,000 a month with this super-reliable dividend stock

I think a great way to build a second income stream is by investing in dividend stocks via a Stocks…

Read more »