If you’re looking to invest £2,000, or any other amount, I highly recommend taking a look at FTSE 250 stocks. Many of these mid-cap companies offer tremendous growth potential, which can’t be found anywhere else.
As such, I think investors stand a higher chance of becoming rich with these investments than any others. Today, I’m going to take a look at two stocks I believe have bright growth prospects.
FTSE 250 stocks to buy
4imprint Group (LSE: FOUR) has gone from strength to strength over the past five years. Since 2014, the company’s earnings per share have grown at a compound annual rate of 21%. During the same time frame, shares in 4imprint have returned 13.2% per annum.
The FTSE 250 company makes its money by selling promotional products. This includes items such as branded pens and bags for marketing purposes. It also develops more premium products and marketing items such as large posters for trade shows.
This is a business where size matters. Operating margins are razor-thin, so economies of scale are critical. 4imprint has been able to use its size to dominate the market. This means the group is highly profitable and throws off a lot of cash.
Management has been deploying this cash back into operations. Investment in the company’s product and marketing to attract new customers is a core part of management plans, and it shows in the group’s historical growth rate.
With $36m of net cash on the balance sheet, I reckon 4imprint has plenty of financial firepower to continue to follow this strategy. Therefore, I think the stock is worth buying today as part of a diversified portfolio of FTSE 250 stocks as its growth continues.
B&M European Value Retail
The UK and Europe are both facing highly uncertain economic outlooks. With that in mind, I think B&M European Value Retail (LSE: BME) could generate significant total returns for investors in the years ahead.
In economic downturns, consumers shop around more for deals. This suggests B&M’s value offer could attract more customers in these uncertain times.
City analysts are certainly expecting big things from the business in its current financial year. They’ve pencilled in earnings growth of nearly 70%. This is unlikely to be a one-off impact. When customers discover B&M’s offering, they may continue to shop with the group while the economic outlook remains unpredictable.
With earnings booming, the FTSE 250 company has the potential to become a dividend champion. The stock currently supports a dividend yield of 2.3%. The payout is covered nearly three times by earnings per share, which suggests it could rise substantially from current levels as the group continues to grow.
As such, I reckon this business can become a major FTSE 250 income leader at a time when many other companies have cut their dividends to preserve cash.
Rupert Hargreaves owns no share mentioned. The Motley Fool UK has recommended 4imprint Group and B&M European Value. 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.