Once again, stock markets are crashing over renewed coronavirus fears, but these two FTSE 250 stocks have defied the downturn to post double-digit growth over the past week. So is now the time to buy them?
FTSE 250-listed animal genetics company Genus (LSE: GNS) is up more than 15% over the last turbulent week, and 60% over 12 months. Its 10-year growth chart shows a steady upward climb that even the coronavirus hasn’t interrupted.
The Genus share price was given a further lift last week as its interims boasted a “strong first-half performance and strategic momentum”, with record adjusted profit before tax, up 27% in constant currency to £36.6m. It also posted its highest first-half adjusted profit before tax growth rate in more in a decade.
Genus aims to breed better pigs and cattle for farmers, allowing them to produce high quality meat and milk more efficiently and sustainably. It has benefited from strong demand from China, which has been restocking following the spread of African Swine Fever, but is also growing strongly in Europe, Latin America, and North America.
CEO Stephen Wilson warned that COVID-19 uncertainties could disrupt trade and hit the business, but added that the board’s second-half expectations should still be met.
Genus looks like a business with strong growth potential to me, as the global population rises and emerging economies expect meat-rich diets. The downside is that it is expensive, trading at a whopping 40.1 times forecast earnings. Those earnings are forecast to grow 13% next year, but it can’t afford any slippage given today’s valuation. It could fly higher if China enjoys a V-shaped recovery in the weeks ahead. Definitely one for a watchlist.
On the PLUS side
Plus500 (LSE: PLUS) is an investment platform that specialises in contracts for difference (CFDs), a popular form of derivative that let traders play shares, forex, commodities, cryptocurrencies, ETFs, options and indices. Demand rises when markets are volatile, as investors look to play falling share prices, boosting customer activity (and fees).
The Plus500 share price is up 10% in the last week, and 120% over three years, but with plenty of volatility in-between. Its shares crashed a year ago, after management warned of “materially lower” profits due to stricter EU limits on how much retail traders can borrow from their broker.
By May, the yield had shot up to 16%, while it was trading at just seven times forecast earnings. Many shied away, but crypto-currency Bitcoin’s resurgence gave it a lift, with further support from recent virus volatility.
My fellow writers on the Fool are sceptical about this stock, as its fortunes are prone to market hype, and customer churn is high. However, last week’s trading update reported “a significant increase in levels of customer trading activity”, with the current quarter up “substantially” year-on-year.
Trading at 10 times forward earnings and with a forecast yield of 4.6%, Plus500 looks tempting, but only for risk seekers who do their research. In contrast to Genus, Plus500 could take a hit from a V-shaped recovery.
It’s official: global stock markets have been on a tear for more than a decade, making this the longest bull market in history.
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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.