These 2 FTSE 250 turnaround stocks are both up 20% in six months

The FTSE 250 (INDEXFTSE:MCX) is full of hidden gems like these two growers, says Harvey Jones.

| 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.

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.

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?

Rude health

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.

Right medicine

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.

Fun Factory

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.

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.

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.

More on Investing Articles

Person holding magnifying glass over important document, reading the small print
Investing Articles

2 top FTSE 250 investment trusts trading at attractive discounts!

This pair of discounted FTSE 250 trusts appear to be on sale right now. Here's why I'd scoop up their…

Read more »

Smiling young man sitting in cafe and checking messages, with his laptop in front of him.
Investing Articles

3 things that could push the Lloyds share price to 60p and beyond

The Lloyds share price has broken through 50p. Next step 60p? And then what? Here are some thoughts on what…

Read more »

Young female business analyst looking at a graph chart while working from home
Investing Articles

£1,000 in Rolls-Royce shares a year ago would be worth this much now

Rolls-Royce shares have posted one of the best stock market gains of the past 12 months. But what might the…

Read more »

Investing Articles

Are HSBC shares a FTSE bargain? Here’s what the charts say!

There are plenty of dirt-cheap FTSE 100 banking stocks for investors to choose from today. Our writer Royston Wild believes…

Read more »

Three signposts pointing in different directions, with 'Buy' 'Sell' and 'Hold' on
Investing Articles

Just released: Share Advisor’s latest ‘Hold’ recommendation [PREMIUM PICKS]

In our Share Advisor newsletter service, we provide buy, sell, and hold guidance for our universe of recommendations.

Read more »

Investing Articles

Investing £5 a day could help me build a second income of £329 a month!

This Fool explains how £5 a day, or one less takeaway coffee, could help her build a monthly second income…

Read more »

Smart young brown businesswoman working from home on a laptop
Investing Articles

2 FTSE income stocks investors should consider buying in April

Income stocks are a great way to build wealth. Our writer details two picks she believes investors should consider snapping…

Read more »

Investing Articles

What might the 5-year price chart tell us about BT shares?

Christopher Ruane considers what clues the long-term performance of BT shares might offer him about business performance and whether to…

Read more »