At 3.1x earnings and with a 7.6% dividend yield, all investors should know this FTSE 250 stock

This FTSE 250 stock isn’t as well known as it should be. Dr James Fox explains why investors should be watching it very closely.

| 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.

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 is filled with exciting opportunities for investors; however, it also contains numerous value traps. Thankfully, I see Bank of Georgia (LSE:BGEO) as an opportunity, but it’s not simple.

Unbeatable metrics

Valuation metrics should always be the first port of call for investors. And Bank of Georgia — Georgia’s (the country) second largest bank — doesn’t disappoint.

Despite the stock surging in recent years, the company is currently trading at 4.43 times earnings from 2023 and 3.1 times forecasted earnings for 2024. That’s a significant discount to British banks.

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

See the 6 stocks

What’s more, Bank of Georgia is on a strong growth trajectory, with the forward price-to-earnings (P/E) ratio set to fall to 2.7 times, and Georgia’s economy currently flourishing. Not only is this cheap compared with other banks, it’s below the Bank of Georgia’s five-year average P/E of 5.1.

Moreover, dividend payments are set to rise to £2.85 per share in 2024, representing a forward yield of 7.6%. This continues to rise to 8.1% in 2025 and 8.4% in 2026.

Created with Highcharts 11.4.3Lion Finance Group Plc PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

What’s the catch?

The first catch is that investors typically assign more value to companies operating in mature and secure economies. While Georgia has been one of Europe’s fastest-growing economies in recent years, it’s an lesser-known economy. Simply, we like to invest in what we know.

It’s also the case that Georgia is experiencing some political upheaval. And as UK investors will know from the last few years, political upheaval can have a profound impact on the economy, and on the attractiveness of domestic stocks.

Keeping an eye on Georgia

This political turbulence is set to come to a head on October 26 when Georgians take to the ballot box. The Georgian Dream are the incumbents, but they’ve come under pressure domestically and internationally for being too lenient on Moscow.

The party has put the economy first, but Tbilisi has seen an influx of Russian migrants, which — judging by the graffiti around the capital — are incredibly unpopular. It’s also the case that party founder Bidzina Ivanishvili made his fortune in Russia… it’s a link that’s hard to break.

Source: Politpro.eu — polling data

The latest polls show the Georgian Dream to be the largest single party, but its share of the vote could fall by 16%, leaving the way for a myriad of other parties to potentially rally against them.

The issue is, politics has been very polarising in recent years. And while some in the West have called for the return of Mikheil Saakashvili-affiliated parties, the man himself was responsible for a war and forced several prominent business owners to nationalise their companies in order to fund his agenda.

In short, we may see more unrest in the coming months, and I’m not entirely convinced as to what would be the best outcome for the country.

And what about Bank of Georgia? Well, I sold my stock prematurely — a year ago — in anticipation of future unrest.

For now, it’s a stock we should all know about because it’s incredibly cheap. But we need to keep a close eye on it, as political unrest could pull this stock further down.

Should you invest £1,000 in Grainger Plc 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 Grainger Plc 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.

James Fox 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.

Our best passive income stock ideas

Do you like the idea of dividend income?

The prospect of investing in a company just once, then sitting back and watching as it potentially pays a dividend out over and over?

If you’re excited by the thought of regular passive income payments, as well as the potential for significant growth on your initial investment…

Then we think you’ll want to see this report inside Motley Fool Share Advisor — ‘5 Essential Stocks For Passive Income Seekers’.

What’s more, today we’re giving away one of these stock picks, absolutely free!

Get your free passive income stock pick

More on Investing Articles

Investing Articles

Here’s the dividend forecast for Rolls-Royce shares as Trump rocks the markets

Rolls-Royce shares have joined in the volatility over the past week. However, with the direction being largely downwards, the dividend…

Read more »

Young Asian man drinking coffee at home and looking at his phone
Investing Articles

Dividend yields of up to 11%! Here are 3 UK passive income stocks to consider

Searching for ways to supercharge your passive income with UK dividend stocks? Here are three that have grabbed our writer's…

Read more »

Young Caucasian woman at the street withdrawing money at the ATM
Investing Articles

£10,000 invested in NatWest shares at the start of 2025 is now worth…

NatWest shares surged into 2025, but things have become a little more complicated in recent weeks. Dr James Fox explores.

Read more »

Investing For Beginners

Why the FTSE 250 could outperform the FTSE 100 for the rest of the year

Jon Smith explains why the FTSE 250 could do better than its big brother when factoring in domestic exposure and…

Read more »

Three signposts pointing in different directions, with 'Buy' 'Sell' and 'Hold' on
Investing Articles

Tariff fears send the Lloyds share price tumbling, but the dividend yield is climbing

Just when the Lloyds Banking Group share price had been rising steadily, along comes a global upheaval to knock it…

Read more »

Bus waiting in front of the London Stock Exchange on a sunny day.
Investing Articles

Here’s how a stock market crash could help an investor retire years early

A stock market crash can be alarming -- but for the well-prepared investor, it can also be an exceptional opportunity…

Read more »

Investing Articles

1 key fact to remember in this stock market correction

This writer takes a look at a FTSE 100 investment trust that is catching his eye after the recent massive…

Read more »

Investing Articles

I was wrong about the Tesla stock price!

Tesla stock's been affected more than most by ‘Liberation Day’. But our writer has other concerns about Elon Musk’s company.

Read more »