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Why I would sell the Centrica share price and buy this FTSE 250 growth stock

Specialist global information business Ascential (LSE: ASCL) is up 3% at time of writing after it reported impressive 25% first-half revenue growth to £236.2m, with earnings up 21.1% to £76.7m. This hopefully signals the end to a tough year for the group, which has seen the share price fall almost 20% in 12 months.

On the Ascent

The FTSE 250 company, which has a market cap of £1.57bn, has 39 offices around the world and serves customers in 150 countries. It offers them “business-critical intelligence, world-class events and advisory services”, to help them “overcome commercial challenges and dramatically improve performance”. Basically, it’s a play on the digital economy and today’s numbers look promising, including 22.3% growth in adjusted diluted earnings per share (EPS) to 11.5p.

CEO Duncan Painter hailed a strong first six months of the year, with considerable progress against key goals, which sets the group on course to meets its medium-term target of double-digit growth. Painter has also been reshaping the group, disposing of its Exhibitions arm, acquiring WARC, BrandView and Flywheel, and reviving the Cannes Lions advertising festival.

Cashing in

Ascential boasts good cash generation, with an operating cash flow conversion rate of 102%, which gives it headroom for continued investment in organic growth and bolt-on acquisitions. In February, Peter Stephens suggested it offers good value for money and may be able to deliver a successful turnaround over the long run.

The downside is that it isn’t cheap, trading at a forecast 21.1 times earnings. The forward yield is just 1.7%, although cover is strong at 2.8. City analysts are pencilling in EPS growth of 14% this year and 12% next, which looks tempting for investors willing to pay a premium for the group’s stronger than average growth prospects.

Cashing out

British Gas owner Centrica (LSE: CNA) is falling today after reports in yesterday’s Sunday Times that it is due to cut its dividend once again, and may even offload its gas and oil business as well.

CEO Iain Conn has his work cut out turning this ship around, with its value plunging from £14bn to about £5.1bn since his appointment in 2015. Time may be running out as shareholders press for a change, although Centrica isn’t the only one of the Big Six power companies to be struggling, shares in SSE are 25% lower than five years ago.

Further to fall?

British Gas lost 742,000 customers last year amid price hikes and intensifying pressure in the home energy sector, while mild weather and low gas prices haven’t helped. Conn’s belief that he can revive the business by focusing on initiatives such as its Hive home devices arm and Local Heroes tradespeople website looks almost delusional.

The Centrica share price is down another 35% this year and the direction of travel has been pretty much unbroken for five years now. Do not put your faith in the published forecast yield of 8.3%, that could be cut by as much as 40%. Its forecast valuation of 11.2 times earnings does not a bargain make. The share price trades at 87p but Roland Head suggests it could be heading for 55p.

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Harvey Jones has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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.