2 FTSE 250 growth stocks I would buy right now

Edward Sheldon looks at two exciting growth stock opportunities within the FTSE 250 (INDEXFTSE:MCX) index.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

sdf

The FTSE 250 index is a fertile hunting ground for growth stocks. Whereas many of the UK’s largest stocks are struggling for growth at present, a scan through the FTSE 250 reveals an abundance of exciting companies that are growing at impressive speeds. Here’s a look at two fast-growing companies I like right now.

Greggs

While the UK high street isn’t exactly flying high at present, one company that is motoring along at a nice rate is bakery chain Greggs (LSE: GRG). Indeed, a 100% rise in earnings per share over the last three years has seen Greggs’ share price more than double in this time, from 600p to 1,260p today. Can this momentum continue?

The steak-bake specialist released a trading update this morning and the numbers look robust, in my view. Total sales for the 13 weeks to 30 September grew 8.6% and company-managed shop like-for-like sales rose 5%. For the year to date, total sales are up 7.8%. The baker advised that so far this year, it has opened 98 new shops, closed 32, and completed 120 refurbishments. It also noted that its new forecasting and replenishment system was resulting in greater product availability for customers and that its healthy ‘balanced choice’ range was popular among consumers.

Should you invest £1,000 in Cineworld right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Cineworld made the list?

See the 6 stocks

City analysts expect top line growth of 6% for this year, which it looks as though the company will comfortably achieve, followed by growth of 6.8% next year. As such, Greggs’ shares could continue to perform well going forward, in my view. A forward looking P/E ratio of 20 means that Greggs is not trading in bargain territory. However, given the company’s current momentum, I believe there could be more gains to come for long-term investors.

Cineworld Group 

Also offering growth stock appeal right now, in my opinion, is cinema operator Cineworld Group (LSE: CINE). This is a company that just continues to perform, despite the technological innovation we’re seeing in the world today, and the rise in popularity of online streaming services such as Netflix.

Cineworld grew its top line by an impressive 13% last year, and City analysts expect that to continue in the near term, with 12% revenue growth estimated for FY2017. Upcoming titles such as Star Wars: Episode VIII, Paddington 2 and Blade Runner: 2049, should continue to attract movie-goers.

Half-year numbers released in August were good, with admissions up 10% for the period. Revenue rose 12.4% on a constant currency basis, and adjusted diluted earnings per share increased 21.3% to 15.4p. The interim dividend was hiked by an impressive 15.4% to 6p. The company noted that its refurbishment programme was progressing well and that this would create “next generation cinemas of a high quality with the latest audio and visual technology.”

The stock currently trades on a forward looking P/E of 17.9, which looks reasonable in my view, given the growth potential on offer. A prospective 3.1% dividend yield, covered 1.8 times by earnings, also adds weight to the investment case. As such, I view Cineworld as a solid long-term option for investors seeking both growth and income.


Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

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.

More on Investing Articles

ISA coins
Investing Articles

Can funds like this help ISA investors retire with a large passive income?

Exchange-traded funds (ETFs) can be powerful weapons in helping ISA and SIPP investors build wealth for retirement.

Read more »

ISA Individual Savings Account
Investing Articles

With a yield of up to 6%, could this bank help a Stocks and Shares ISA generate £10,000 of passive income a year?

A Stocks and Shares ISA is a popular way of saving for retirement. But how much would be needed to…

Read more »

Thoughtful man using his phone while riding on a train and looking through the window
Investing Articles

This FTSE 250 trust is easily beating the global index in 2025. Time to buy?

One global FTSE 250 investment trust has been turning things round recently, with a handy bit of outperformance. Ben McPoland…

Read more »

Bournemouth at night with a fireworks display from the pier
Investing Articles

Is the fizz about to go from the Coca-Cola HBC share price?

The world’s most popular drink’s hitting the headlines again. Our writer considers whether there are any implications for the Coca-Cola…

Read more »

Portrait of a boy with the map of the world painted on his face.
Investing Articles

3 top FTSE 250 investment trusts to consider buying today 

This trio of high-quality trusts from the FTSE 250 index would give a Stocks and Shares ISA portfolio a truly…

Read more »

Arrow symbol glowing amid black arrow symbols on black background.
Investing Articles

Another strong set of results from this FTSE 100 telecoms company. Time to buy?

The FTSE 100’s Airtel Africa released its first-quarter earnings yesterday (24 July). Our writer’s been taking a closer look at…

Read more »

A quiet morning and an empty Victoria Street in Edinburgh's historic Old Town.
Investing Articles

The Rightmove share price is too hot… a pullback could be coming

The Rightmove share price has pushed above the consensus share price target. And while analysts are often wrong, this could…

Read more »

Branch of NatWest bank
Investing Articles

With the bank’s income, margin and earnings higher, the NatWest share price continues where it left off!

Post-pandemic the NatWest share price has been the third-best performer on the FTSE 100. Our writer looks at the bank’s…

Read more »