Up 26% this week! Could this FTSE 250 share soar over the next year?

There could be a lot of potential in the mid-cap stocks of the FTSE 250. After a major City bank tipped the index for growth, one stock caught my eye.

| 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.

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

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.

I’m always on the hunt for undervalued stocks with long-term growth potential and right now, the FTSE 250‘s looking good. With big-cap Footsie stocks dominating the headlines this year, many mid-caps have been ignored for too long.

Major City bank UBS recently called out the potential in the FTSE 250, saying it’s “in the right place, at the right rate”.

If trade policies tighten under the new Trump administration, it could dampen performance on the more internationally traded FTSE 100. That could shift focus to our smaller, more locally-traded mid-cap index.

Should you invest £1,000 in Smith & Nephew 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 Smith & Nephew Plc made the list?

See the 6 stocks

Rate cuts could play a big role too. There appears to be a notable correlation between rate cuts and the UK market growth over the past five years.

Historically, UK stocks have enjoyed growth of up to 70% in the year following an initial rate cut. With the Bank of England expected to initiate further rate cuts in the coming year, that’s a promising statistic.

So with that in mind, here’s a FTSE 250 stock worth considering for growth in 2025.

Victrex

Victrex (LSE: VCT) manufactures polymer components for various industries, including energy and transport. It also has a biomedical arm, Invibio, that makes implantable materials to treat sports and age-related injuries.

Few people know the name but its materials are widely used in everyday products. It’s also one of few British producers of polyaryletherketones (PEEK), a market expected to grow at a rate of 6.1% over the next five years.

The road to recovery

Despite strong market dominance, it’s down 53% in the past five years. A weakened economy and supply chain issues have strangled revenue while ramping up expenses.

Created with Highcharts 11.4.3Victrex Plc PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

But a recovery now looks to be on the cards. The share price surged 20% earlier this week after it published a promising earnings report. This half it enjoyed 15% more volume than the first half of 2024, with a cash conversion of 114%.

It also achieved 1,000 tons of volume for the first quarter in several years.

Once again, it maintained a final dividend of 46.14p. The yield now stands at an attractive 5.4%. Dividends increased from 8.6p to almost 60p per share over the past 20 years.

It’s not completely in the clear yet though. Revenue still contracted 5.2% and adjusted pretax profit was down 26% since last year.

Medical destocking and a decrease in asset utilisation hurt the company’s profitability this year. These remain key risks that could continue to strangle profits going forward. 

Earnings are also at risk from currency fluctuations, with the company anticipating a £7m-£8m hit in 2025.

But CFO Ian Melling said the company is “entering a period of significantly lower CapEx” having completed most of its key investments. This should improve cash flow going forward and could equate to higher shareholder returns.

Final thoughts

Following the positive result, major broker Jefferies put in a Buy rating for the stock on 4 December, helping to further legitimise its recovery.

Those who bought the dip last week will be celebrating the recent jump. Sadly, I missed out. But either way, I don’t have the spare cash to buy the stock right now. 

Still, I’m keeping a close eye on it. If destocking tapers off and medical revenue improves, it could turn out to be a big winner next year.

But this isn’t the only opportunity that’s caught my attention this week. Here are:

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.

Mark Hartley has no position in any of the shares mentioned. The Motley Fool UK has recommended Victrex 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

Investing Articles

When will Lloyds shares hit £1?

Lloyds shares have surged over the past 12 months, but where will they go next? Dr James Fox thinks there’s…

Read more »

Middle-aged white man wearing glasses, staring into space over the top of his laptop in a coffee shop
Investing Articles

Stock-market crash: the meltdown of the Magnificent 7

Just before Christmas, these Magnificent Seven stocks were riding high. But after the worst quarter for US stocks since autumn…

Read more »

Investing Articles

Wow! IAG shares are undervalued by 47%, according to analysts

IAG shares have surged over the past 18 months, but analysts are pointing to more growth. Dr James Fox takes…

Read more »

Investing Articles

2 cheap FTSE 100 and FTSE 250 shares to consider for an ISA before 5 April!

These FTSE 100 and FTSE 250 shares are on sale today! Here's why long-term Stocks and Shares ISA investors should…

Read more »

Investing Articles

How I’m building a new second income for 2035

Millions of us invest for a second income. Here are the steps Dr James Fox is taking in order to…

Read more »

Investing Articles

At a 52-week low but forecast to rise 73%! Is this growth share the FTSE’s top recovery play? 

This FTSE 100 growth share has taken an absolute beating over the past two years but Harvey Jones says the…

Read more »

Investing Articles

This FTSE 250 share offers a juicy 9.8% yield. Will it last?

This well-known FTSE 250 share has a percentage dividend yield approaching double digits. Should Christopher Ruane add the income share…

Read more »

Investing Articles

Is a £333,000 portfolio enough to retire and live off passive income?

A third of a million pounds can generate a serious amount of passive income, but relying on this sum alone…

Read more »