The FTSE 250 index is home to many exciting companies that offer both capital growth and income potential. Here’s a look at two under-the-radar companies that I believe look attractive right now.
£1.1bn market cap Ibstock (LSE: IBST) is a clay bricks and concrete manufacturer that has operations both in the UK and the US. With demand for housing showing no sign of subsiding, the FTSE 250 firm could represent a good way of gaining exposure to the housebuilding industry.
The shares are up around 4% today, on the back of a solid set of full-year results released this morning. For the year ended 31 December, revenue climbed 3.9% to £451.6m and adjusted profit before tax rose 12.1% to £83.4m with the company benefitting from good activity levels in the UK new-build housing sector. Adjusted basic earnings per share increased a healthy 18.4% to 21.4p per share.
There was good news for income investors, as not only did the company hike its full-year dividend by 18.1% to 9.1p per share, but it also announced that it expects to declare a ‘supplementary’ dividend alongside the interim dividend in 2018.
CEO Wayne Sheppard commented: “We performed strongly during the year, delivering profits and cash generation in line with management’s expectations. Customer demand in our UK clay and concrete markets remains encouraging and while we remain mindful of the uncertainties in the UK economy, we expect another year of progress for the Group.”
Since floating in late 2015, Ibstock shares have performed well, rising over 40%. However, despite that gain, the stock still offers compelling value, trading on a P/E of just 13 times 2018’s estimated earnings. Furthermore, with analysts currently expecting a dividend payout of 9.45p for FY2018, a figure I expect to be revised upwards shortly, the stock offers a prospective yield of an attractive 3.5%. This is a stock to watch closely, in my view.
Another FTSE 250 company that appears to offer strong value and excellent income prospects right now is Britvic (LSE: BVIC). Many of its products are household names as the company manufactures well-known beverages such as Robinsons squash, J2O and Tango, and also has agreements to make, distribute and market global brands such as Pepsi and 7UP.
The company stated in January that it has made a solid start to the new financial year and that it is well-placed to navigate the uncertainty of the UK soft drinks levy through the strength and breadth of its brand portfolio and marketing and innovation plans. It also said that it was confident of making further progress in 2018 as a result of its continued focus on revenue and cost management.
The market wasn’t impressed with January’s update however, and the stock has declined from over 800p in late January to just 684p today. At that price, I see an opportunity for long-term investors, as the forward-looking P/E ratio is now just 12.9 and the prospective yield on offer is an attractive 4%. Given the elevated valuations and low yields of many other consumer staple stocks, Britvic appears to offer compelling value at present.
Edward Sheldon has no position in any shares mentioned. The Motley Fool UK owns shares of and has recommended Britvic. 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.