Habitual Fool readers will know that I am keen on value and dividend investing. I often look for undervalued and mispriced shares in the FTSE 100 and FTSE 250 to add to my family portfolio.
Our current collection of low-priced stocks includes 16 blue-chip UK shares and four mid-cap holdings. We had another FTSE 250 share, but this was delisted in March after a takeover. Also, another of our mid-cap stocks is set to follow suit, while a third is rumoured to be in bid talks.
Thus, we could soon lose two more holdings — admittedly, at large premiums to our original buy prices. Hence, I’ve been sifting through London-listed shares looking for replacement bargains.
What’s in a name?
Last Saturday, I searched the FTSE 250 to see if any mid-cap stocks caught my eye. And I was shocked to discover that I didn’t initially recognise the mid-cap index’s best performer of the last half-decade.
Only six mid-cap shares have at least quadrupled in price over the past five years, with gains ranging from 334% to 515.1%. I recognised five of these six, but not the top performer: Lion Finance Group (LSE: BGEO). Then I saw its ticker and realised that this is the new name for the former Bank of Georgia Group.
44% a year for five years
Bank of Georgia was privatised in 1994 and is headquartered in Tbilisi, Georgia. That’s Georgia the nation in Eastern Europe, not the southern state in the US. Georgia is a fairly small nation with a population of around 3.7m people, where Bank of Georgia is the second-largest bank by assets.
What’s amazing about this stock is that it has skyrocketed by 515.1% over the past five years. This would have turned £1,000 into £6,151 in half a decade. This amounts to compound yearly growth of 43.8% a year — an astonishing return for delighted shareholders.
Here’s how this low-key mid-cap share has performed over six other periods:
| One week | +5.5% |
| One month | +9.6% |
| Three months | +27.6% |
| Six months | +42.4% |
| One year | +19.2% |
| Two years | +106.6% |
| Three years | +393.9% |
As my table shows, this super-stock has produced positive returns over periods ranging from one week to five years. What’s more, these are purely the capital gains from the shares, which also pay out healthy cash dividends.
On Friday, 2 May, the shares closed at 6,065p, valuing this group at almost £2.7bn. They trade on a multiple of just 3.9 times trailing earnings, delivering a dividend yield of 25.6%. Therefore, the dividend yield of 4% a year is covered almost 6.4 times by historic earnings. That’s a massive margin of safety, indicating that this payout is safe for now.
Despite their stratospheric rise since the Covid-19 crisis that rocked markets in March 2020, these FTSE 250 shares look incredibly cheap to me. Accordingly, I’ve put them at the top of my buy list.
However, I also understand that buying this stock comes with certain geopolitical issues. Georgia lies under the baleful gaze of Russia, which attacked the smaller nation in August 2008. Also, widespread corruption has been a persistent problem since Georgia declared independence in 1991. So we won’t be ‘betting the farm’ on this FTSE 250 firm!
