Down 21% in 6 months, I expect this FTSE 250 growth share to bounce back!

The FTSE 250’s packed with brilliant bargains right now. Here, Royston Wild picks out one of his favourites after its share price fell to earth.

| 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.

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

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.

The FTSE 250 continues to fly as investor appetite for UK-focused shares picks up. At around 21,356 points, the London stock market index is now up 8% since the start of 2024.

Of course, there’s also been some big fallers in recent months. This includes some high-quality companies that — in my opinion — investors have been too hasty in selling off.

Such declines present an excellent investment opportunity for long-term investors like me however. By buying expertly-run businesses at today’s discounted prices, I stand to make stunning returns when (as I expect) they eventually bounce back.

Should you invest £1,000 in Lloyds Banking Group right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Lloyds Banking Group made the list?

See the 6 stocks

Applying this strategy, here’s a great FTSE 250 share I expect to recover strongly over time and see it as worthy of further research.

Up, but still down

Created with Highcharts 11.4.3SSP Group PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

Shares in SSP Group (LSE:SSPG) have taken off in July following a sparkling set of trading numbers. However, over a six-month time horizon the business is still nursing heavy share price losses.

At 176.3p per share, it’s fallen a whopping 21% in total over the period.

SSP operates food and beverage outlets in train stations, airports and other travel locations. Its major brands include baguette vendor Upper Crust and Ritazza coffee shops. The firm also operates franchise outlets for blue-chip brands like Starbucks, McDonalds and Greggs.

Investors heavily sold its shares following May’s half-year trading update. Back then, it said that pre-tax profits had dropped 19% year on year between October and March. This was despite a 15% surge in revenues.

SSP’s bottom line was impacted by industrial action on the French and German railways, along with high levels of renewals in Europe and their related costs. Adverse currency movements didn’t do the firm any favours either.

Problems unwinding

But these pressures are likely to prove temporary, some analysts believe. Indeed, last month’s reassuring update illustrates that SSP may be past the worst and that conditions are improving. Then the company affirmed full-year underlying operating profit target of between £210m and £235m.

SPP said that sales rose 15% during the April to June quarter, up from 12.3% in the prior three-month period. It commented that “led by an increasing demand for leisure travel, we have seen a strong sales performance across all regions“.

A fresh economic downturn could scupper the company’s progress in recent months. So could a worsening in currency-related effects. But as things stand, the business looks in good shape to capitalise on the peak summer period and to perform strongly thereafter.

A top value stock

City analysts agree with my bullish opinion. For the next two financial years, company earnings are tipped to rise 62% and 32% respectively.

Such forecasts also leave SSP shares looking dirt cheap on paper. A price-to-earnings growth (PEG) ratio of 0.3 for this year, and 0.4 for the following 12 months, fall below the widely regarded bargain benchmark of 1.

Analysts have attached an average 12-month target price of 280.6p per share to SSP. This represents an attractive 60%-plus premium from current levels.

I think the business could enjoy rapid share price growth over the long term too, as it expands internationally to capitalise on the steady rise in traveller numbers.

But what does the head of The Motley Fool’s investing team think?

Should you invest £1,000 in Lloyds Banking Group right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Lloyds Banking Group made the list?

See the 6 stocks

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.

Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended Greggs Plc and SSP Group. 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.

Pound coins for sale — 51 pence?

This seems ridiculous, but we almost never see shares looking this cheap. Yet this recent ‘Best Buy Now’ has a price/book ratio of 0.51. In plain English, this means that investors effectively get in on a business that holds £1 of assets for every 51p they invest!

Of course, this is the stock market where money is always at risk — these valuations can change and there are no guarantees. But some risks are a LOT more interesting than others, and at The Motley Fool we believe this company is amongst them.

What’s more, it currently boasts a stellar dividend yield of around 8.5%, and right now it’s possible for investors to jump aboard at near-historic lows. Want to get the name for yourself?

See the full investment case

More on Investing Articles

Investing Articles

£20K invested in Tesla stock last April is now worth…

Despite all the bad headlines lately, Tesla stock has put in a storming performance over a 12-month timeframe. Is this…

Read more »

Investing Articles

If a 40 year old invests £600 a month in a SIPP, here’s what they could have by retirement

With no retirement savings at 40, an investor could put £600 a month into a SIPP and grow its value…

Read more »

Stack of British pound coins falling on list of share prices
Investing Articles

Why hasn’t its 9.9% yield boosted the Phoenix share price?

Phoenix Group has a dividend close to double digits, but saw a weak share price performance in recent years. Christopher…

Read more »

Silhouette of a bull standing on top of a landscape with the sun setting behind it
Investing Articles

With average 10% yields, these mid-cap FTSE shares could supercharge a passive income portfolio

Some of the best passive income gems can be found on the UK's smaller indexes like the FTSE 250 and…

Read more »

A coin being dropped into a piggy bank
Investing Articles

As the Barclays share price tanks 19% in 2 days, is this a great buying opportunity?

As a trade war sends the Barclays share price into a tailspin, Andrew Mackie steps back to look at the…

Read more »

Portrait of elderly man wearing white denim shirt and glasses looking up with hand on chin. Thoughtful senior entrepreneur, studio shot against grey background.
Investing Articles

Is Fundsmith Equity still a good choice for a Stocks and Shares ISA in 2025?

Many Britons hold the Fundsmith Equity fund in their Stocks and Shares ISAs. Is this still a good move? Edward…

Read more »

Investing Articles

Nvidia stock is down 24% this year. Time to buy the dip?

Christopher Ruane has been eyeing Nvidia stock as a potential addition to his portfolio for a while. Is a recent…

Read more »

Petrochemical engineer working at night with digital tablet inside oil and gas refinery plant
Investing Articles

Down 25% since January, this resilient dividend stock’s catching my eye

Maintaining the UK’s rail, water, and energy infrastructure isn’t the most exciting business. But it has made this a solid…

Read more »