The so-called Magnificent Seven are the large-cap US tech stocks that have been leading the charge in share price gains over the past year. The rally has been impressive, but I’m not entirely sure how much more room to run this group has. Closer to home, there are some FTSE 250 ideas that I think look cheaper and could offer better value for investors.
Hungry for more
The first company in consideration is Greggs (LSE:GRG). Over the past year, the stock is up 11%. The business is continuing to outperform and has started 2024 strongly. For the first nine weeks of the year, it reported like-for-like sales growth of 8.2% versus last year.
Even though the business model of selling bakery goods might seem rather simple, I don’t really care. The management team is thinking outside the box in growing new revenue lines. For example, more than 1,200 sites are competing for food-on-the-go-sales until 7pm or later.
And 1,340 shops are now available on Just Eat, with 930 online for Uber Eats. This channel has seen sales grow by 23.6% in 2023.
Consumers are clearly enjoying this. Greggs last year had a total share of food-to-go visits of 8.2%, up from 7.7% in 2022. However, a risk is that market share growth could slow as Greggs will soon need to take more market share from larger competitors that have a more loyal client base.
I like the firm because I expect the growth in the share price to be steady but consistent in coming years. Unlike some tech stocks, the volatility should be lower and it’s generally a lower-risk option for investors to consider.
Growth in the retirement sector
The other option is Just Group (LSE:JUST). I recently wrote about the business in detail, following a sharp rally in the share price on better-than-expected results.
Even with the stock up 27% over the past year, it still only has a price-to-earnings ratio of 3.63. This is very low, in my opinion, and could support further share price gains as the year goes on in order for the ratio to be at a more reasonable level.
On top of the 47% jump in operating profits in 2023 versus the prior year, the outlook for the financial retirement products and services provider looks rosy. Its CEO commented that “we now expect to achieve our target of doubling profits in three years instead of the originally intended five”.
Let’s not forget that this sector isn’t known for stunning growth, so the fact that Just Group is outperforming makes it even more appealing.
One concern is the fact that the bump in profits has been helped by higher interest rates. If rates start to fall this year it could hinder future growth plans.
Ultimately, I think both FTSE 250 options could be a great alternative for investors looking for growth but feel the ship has sailed for the Magnificent Seven.
