The following two FTSE 250 stocks are both enjoying a revival in their fortunes, leaping around 20% in the last six months. Is there still time to hop on board the momentum train?
Specialist global healthcare company BTG (LSE: BTG) has been a tonic for investors lately, its share price up almost 19% in the last six months. However, this follows a volatile year, with the stock struggling despite plenty of positives. Last October, BTG lifted its revenue guidance as the weak pound boosted the value of its overseas earnings, then it reported double-digit revenue growth in November.
In April it looked on course to beat its full-year revenue targets thanks to growth in interventional medicine but it all went wrong in May, with a reported drop in full-year pre-tax profit as the benefits from weaker sterling were offset by hedging losses on forward contracts. The share price plunged almost 15% from 730p to 625p, and despite the fightback it has yet to recover all of its losses, currently trading at around 670p.
The investment case remains strong, with full-year revenues rising from £447.5m to £570.5m, and product sales up 37% to £387.3m, while chief executive Louise Makin anticipates continued double-digit product sales growth. BTG boasts a healthy portfolio of products across oncology, vascular, pulmonology and speciality pharmaceuticals, although trading at a slightly pricey forecast valuation of 22.8 times earnings, it will have to deliver on those to keep investors happy.
However, with forecast earnings per share (EPS) growth of 28% in the year to 31 March 2018, then another 15% in 2019, things look promising. Today’s price-to-earnings growth (PEG) ratio of 5.2 looks shockingly expensive but that is forecast to fall to a more than reasonable 0.8, so the company is heading in the right direction. Pharmaceutical companies are always risky, but BTG appears to have a bright future.
Performance at high street greetings cards retailer Card Factory (LSE: CARD) has been worth celebrating, with the stock up 21% in the last six months after recovering from a patchy spell. The company recently reported a good start to the year, with underlying Q1 group sales growth up 6.1% after accounting for 2016’s leap year.
Card Factory opened 11 net new stores in the quarter, taking its total estate to 876, with another 50 anticipated in the current financial year, plus further trials in the Republic of Ireland. Since January, it has also reduced net debt by £10.4m to £125.4m.
Dividends on the cards
Consumer sentiment is slackening at the moment, although people still buy cards and gifts in a recession and Card Factory is at the budget end of the business, giving investors some protection. Its website Gettingpersonal.co.uk offers personalised cards and gifts, offering another growth opportunity.
This looks a simple business model and trading at 15.5 times earnings, both current and forecast, markets think they have got the measure of it. EPS are expected to be flat this year, then rise 5% in the 12 months to 31 January 2019. Card Factory has stated its desire to reward loyal shareholders, and the yield is forecast to hit 7.2% in 2019, which only adds to its appeal.
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Harvey Jones has no position in any shares mentioned. The Motley Fool UK has recommended BTG. 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.