Some think that large companies with market-caps of hundreds of millions of pounds can’t offer exceptional share price returns because they are too big. However, this isn’t true. In fact, even FTSE 250 stocks can still have the potential to rapidly increase in value.
Here’s one that would have over tripled an investment from just a year ago!
Understanding the basics
I’m talking about Saga (LSE:SAGA) which isn’t just another insurer or travel company. It’s built around a very specific niche of affluent customers aged over 50. That demographic tends to have higher disposable income and strong brand loyalty.
The business has three main engines. First is travel, including ocean cruises and packaged holidays. Second is insurance, where Saga increasingly acts as a broker rather than taking underwriting risk. And third, smaller divisions like personal finance and its well-known magazine.
Over the past year, the stock’s up an incredible 266%. This means £2k invested a year ago would now be worth £7,320. That’s an incredible return, vastly outstripping both competitors and the broader FTSE 250 index.
Even so far in 2026, when the market has been under pressure due to the conflict in the Middle East, Saga stock’s up 22%. As a note, the profit is unrealised and would fluctuate daily. It would only be confirmed when the stock was sold, and the proceeds banked in cash.
Reasons for the surge
The main driver of the move has been tangible benefits from the turnaround plan. For example, a return to profit. Back in September, the half-year results showed a flip from a loss of £116.9m to a profit of £3.7m. The full-year results are due out later in April, but the trading update from January reinforced the improved finances after saying full-year profit was set to be ahead of guidance.
Net debt’s also coming in lower, which has acted to reassure investors as it shifts the dynamic from a struggling firm to one that’s on the front foot. In the January trading update it said: “This is supported by the strong trading cash flow and final proceeds from the sale of our Insurance Underwriting business“.
Finally, investors are already buying due to factoring in more outperformance in the future. Momentum’s expected to continue in the Cruise and Holidays businesses. The over-50s demographic is expanding and wealthier than younger cohorts, a trend noted as driving increased travel demand.
Fundamentally, this is a structural growth driver that doesn’t depend on the economic cycle as much as you’d think.
However, one risk is that debt levels are still high. It’s good it’s coming down, but if interest rates increase this year in the UK it could still be problematic for the company with higher debt financing costs.
On balance, I think Saga could continue to outperform and is a stock to consider.
