These under-the-radar FTSE 250 stocks haven’t just beaten the market. They’ve thrashed it!

If you think picking stocks never pays, our writer has news for you. Paul Summers highlights two FTSE 250 shares that have made a mockery of the index return.

| 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.

A young woman sitting on a couch looking at a book in a quiet library space.

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.

While the UK economy is far from firing on all cylinders, the home-focused FTSE 250 index has climbed just under 7% in value since January (and 13% in the last 12 months).

However, this is nothing compared to the performance of some of its constituents.

Magical stock

Harry Potter has been a literary phenomenon. Even so, I suspect many people won’t be aware that the company getting the books into readers’ hands is listed on our stock market. That’s Bloomsbury Publishing (LSE: BMY) and it’s been a superb investment for the last few years.

Should you invest £1,000 in BT 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 BT made the list?

See the 6 stocks

Since September 2019, the shares price is up a spell-binding 186%. But just buying the stock in January would still have delivered a 42% gain.

Oh, and there have been dividends on top of this!

Created with Highcharts 11.4.3Bloomsbury Publishing Plc PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

Lockdown star

Bloomsbury’s purple patch really kicked off during the pandemic. Sent behind our doors, many of us fell back into the habit of reading for leisure and earnings boomed.

In contrast to other activities, this trend has endured since the bug was sent packing. Even a cost-of-living crisis doesn’t appear to have impacted momentum. In fact, the mid-cap has been busy upgrading guidance.

The big question is how much of this is now priced in.

More to come?

As I type, Bloomsbury stock changes hands for 20 times FY25 earnings. That’s more than the average across UK stocks.

One could also argue that publishers can’t really predict which titles will be successful and that profits are overly-dependent on a small group of very popular authors. And writing books takes time.

On the other hand, management’s efforts to grow the company’s academic arm by prioritising international sales, subject area expansion and digital scholarship could pay off. The balance sheet also looks pretty robust to me, with a decent net cash position.

All told, Bloomsbury continues to present as a quality business. But it’s also one I’d prefer to pick up during a period of general market malaise.

Stunning gains

Another stock delivering the goods for private investors willing to stray off the beaten track has been CMC Markets (LSE: CMCX).

Shares in the online trading platform provider have rocketed nearly 190% this year. Again, this doesn’t take into account the dividends received over the period (8.3p per share).

Created with Highcharts 11.4.3Cmc Markets Plc PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

There have been a number of catalysts for this incredible return. Chief among these has been an increase in trading activity among clients as markets have become more choppy. In it’s most recent update, the company maintained its guidance on full-year operating profit of between £320m and £360m.

But investors have also been cheering news of potential partnerships, product launches, and a sustained period of cost-cutting.

Risky pick

As brilliant as recent returns have been, one does need to be aware that longer-term holders of CMC have endured a lot of pain. Between April 2021 and October 2023, the stock crashed by over 80% as the pandemic trading boom subsided.

It’s also worth noting that the share price has been drifting sideways for a couple of months. Perhaps it might take an earnings upgrade to move higher. In the absence of a significant geo-political event, I’m not convinced that will happen when half-year numbers are announced in November.

For this reason, CMC also stays on my watchlist.

5 Shares for the Future of Energy

Investors who don’t own energy shares need to see this now.

Because Mark Rogers — The Motley Fool UK’s Director of Investing — sees 2 key reasons why energy is set to soar.

While sanctions slam Russian supplies, nations are also racing to achieve net zero emissions, he says. Mark believes 5 companies in particular are poised for spectacular profits.

Open this new report5 Shares for the Future of Energy — and discover:

  • Britain’s Energy Fort Knox, now controlling 30% of UK energy storage
  • How to potentially get paid by the weather
  • Electric Vehicles’ secret backdoor opportunity
  • One dead simple stock for the new nuclear boom

Click the button below to find out how you can get your hands on the full report now, and as a thank you for your interest, we’ll send you one of the five picks — absolutely free!

Grab your FREE Energy recommendation now

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.

Paul Summers has no position in any of the shares mentioned. The Motley Fool UK has recommended Bloomsbury Publishing Plc. 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.

Like buying £1 for 51p

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

Warren Buffett at a Berkshire Hathaway AGM
Investing Articles

Dividend investors! Here’s what Warren Buffett says builds wealth in the stock market

Reinvesting dividends at yields of 8% or higher looks like a good way of building wealth. But Warren Buffett has…

Read more »

Calendar showing the date of 5th April on desk in a house
Investing Articles

Here’s my Stocks and Shares ISA plan for 2025-26

A Stocks and Shares ISA helps investors avoid taxes on dividends and capital gains. And Stephen Wright has a plan…

Read more »

Dividend Shares

Of the 20 highest-yielding FTSE 100 stocks, this is my top pick

This FTSE 100 stock currently offers a yield of 6.4%. But Edward Sheldon believes it’s capable of providing share price…

Read more »

Investing Articles

Could Tesla’s share price jump over the next 12 months? These analysts think so!

Tesla's share price has fallen by almost a third since 1 January. But optimism is high that Elon Musk's company…

Read more »

Investing Articles

I asked ChatGPT where the FTSE 100 will be in 6 months: here’s what it said…

Let’s be realistic, ChatGPT can’t predict the future. But it did do a good job of compiling data from brokerages…

Read more »

Investing Articles

Could the Rolls-Royce share price hit £10?

The Rolls-Royce share price has taken most analysts by surprise with almost everything going right for the British engineering giant.

Read more »

Investing Articles

4 REITs Fools own for passive income

REITs often have higher-than-average dividend yields compared to other stocks, making them a solid choice to consider for passive income…

Read more »

artificial intelligence investing algorithms
Investing Articles

Up 272% in just a year, is Palantir stock just getting started?

This writer recognises that Palantir has grown its business very well -- but does the stock price offer him an…

Read more »