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I’d buy this absurdly cheap FTSE 250 dividend stock and this supremely expensive FTSE 100 growth monster

Pensions advisers Just Group (LSE: JUST) is up 3.3% this morning after beating expectations by posting an 85% increase in first-half adjusted operating profits to £124m.

Once in a lifetime

Just has looked dirt cheap for a while but there’s a sticking point. Management deferred an interim dividend declaration due to the threat to its finances from proposed changes around equity release lifetime mortgages.

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Its share price plunged more than 30% after the Prudential Regulation Authority launched a consultation in July on whether firms operating in this growing sector should set aside more capital to protect against any fallout from a house price crash. Options include re-insuring some of its book, or even raising equity. Just also has the flexibility to issue further Tier 2 debt or Restricted Tier 1 debt.

Just in!

Market worries may have been eased by today’s numbers, which saw a healthy solvency coverage ratio of 150% for the six months to 30 June, up from 139% at the end of 2017. New business profit rose 88% to £121m year-on-year, driven by strong sales growth and an increase in new business margins, from 8.9% to 10.2%. However, IFRS profit before tax fell from £66m to £45.7m.

Group CEO Rodney Cook hailed pleasing trading results, saying: “Exceptional sales growth, new business profit growth and adjusted operating profit growth are testament to our financial discipline and our group capabilities.”

The retirement and lifetime mortgage market is growing strongly and this £843m FTSE 250 company trades at a ridiculously low forecast valuation of 5.7 times earnings, with a prospective yield of 4.5% and chunky cover of 4.3. Dividends payouts are on hold for now, but will hopefully flow later. The lifetime mortgage issue seems very much in the price and, if you’re willing to gamble, the stock could fly if it finds a resolution.

Ship shape

At the other end of the valuation scale, financial services company Hargreaves Lansdown (LSE: HL) trades at a whopping forecast valuation of 44.4 times earnings. There’s a reason for that, and it’s a nice one. The stock has delivered a decade of pretty much steady upward share price growth and the momentum is continuing, with a 57% rise in its share price in the last year alone.

I have one of the group’s popular Vantage accounts and if you do too, you’ll know that Hargreaves may not be the cheapest but offers excellent service. And of course, it has scale and visibility on its side.

And Bristol fashion

Royston Wild recently labelled this £10.35bn FTSE 100 company expensive but exceptional! and that seems to cover it perfectly. He also urged investors to ignore the low forecast yield of 1.9%, with cover of 1.2, pointing out its generosity with special dividends.

So can it keep growing? City analysts are pencilling in 16% EPS growth in the year to 30 June 2019, trimming the valuation to 38.3 times earnings. As ever with investment-related stocks, much depends on the market. If you’re worried about contagion from the emerging markets crisis, for example, you might want to delay your purchase. But if you see a buying opportunity, jump on it.

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

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harveyj has no position in any of the shares mentioned. The Motley Fool UK has recommended Hargreaves Lansdown. 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.

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