The Motley Fool

3 overlooked FTSE 250 growth stocks to buy now?

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.

FTSE 100 shares are usually headline news, while many in the FTSE 250 can fail to attract attention by the markets. I’ve been trawling that index, and I’ve identified three shares that I reckon are worth a closer look:

A cracking IPO?

Ascential (LSE: ASCL) shares have soared by 48% since flotation just a year ago. It’s a business-to-business media company which handles events and information services — it’s responsible for the Cannes Lions International Festival of Creativity, for example.

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…

And if you click here we’ll show you something that could be key to unlocking 5G’s full potential...

Results for 2016 should be with us on 27 February, and there’s a serious profit expected. At the halfway stage, we saw a 28% rise in adjusted operating profit, and a strong EBITDA margin of 33%. The cash that generated allowed the company to get its IPO-time leverage of 2.5 times down to 1.9 times, which is impressive in less than six months.

The mooted P/E multiple of 20 would imply a PEG of 0.1, although such valuations are really not so meaningful for a new growth prospect that is only just turning profitable.

But forecasts for the next two years would drop the P/E to 15 by 2018, and dividends are expected to climb sharply and provide a yield of 2.3% that year. With Ascential showing strong cash-cow potential, I see good times ahead.

ZP… who?

I don’t really understand why companies with well-known brands change their names, but that’s what Zoopla Property has done by switching to ZPG (LSE: ZPG) this month. In a way it makes sense, as the company doesn’t just run its Zoopla business, but also uSwitch which the company bought in April 2015, plus the PrimeLocation and Property Software Group brands.

Results to September 2016 included an 84% rise in revenue, leading to a 51% boost to EPS. Debt was up, but the company had a successful equity placing earlier this month which raised a gross £76m.

We’re looking at a potentially impressive growth company here that is still in its early stages, and that does show in the current share valuation — at a price of 382p, we see a forward P/E of 27 this year, though earnings growth forecasts would drop that to 23 next year.

But unlike some online offerings in their early days, ZPG is strongly cash generative, and it’s already handing out strongly progressive dividends — the yield should only be around 1.5% this year, but it’s rising way faster than inflation.

Another rename

Speaking of renamed companies, office space provider Regus has changed its name to IWG (LSE: IWG), with the new entity registered as a holding company in Jersey. Regus/IWG shares have fallen from a November 2015 peak of nearly 350p to 262p today, so does that represent an attractive buying opportunity? I think it does.

The company has been steadily growing its profits for years, and analysts have two more strong forecasts out for this year and next — EPS rise of 21% for 2017, followed by another 16% in 2018. That provides PEG ratios for the two years of 0.7 and 0.8 (where 0.7 and under is usually considered very attractive), which I think shows a tempting growth valuation for what is actually quite a mature company. IWG is paying dividends, too — yielding only around 2.3%, but that’s a nice extra for a company I’d buy specifically for growth.

Full-year results are due on 28 February. The nine months to September 2016 saw revenue rise by 8.1%, with underlying cash generation increasing 52% year-on-year, and I think that presages another good year.

“This Stock Could Be Like Buying Amazon in 1997”

I'm sure you'll agree that's quite the statement from Motley Fool Co-Founder Tom Gardner.

But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.

What's more, we firmly believe there's still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.

And right now, we're giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool.

Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge!

Alan Oscroft has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Our 6 'Best Buys Now' Shares

Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply click below to discover how you can take advantage of this.