Last week was a busy one for company news, and three FTSE 250 shares particularly caught my eye. I believe all three are strong businesses. Here’s what I liked about their updates and why I’d be happy to buy their shares in May.
Considerable appeal
Medical products and technologies company ConvaTec (LSE: CTEC) is a FTSE 250 share I think has considerable appeal. For one thing, it’s a geographically diversified global business. For another, it has leading market positions in the areas it focuses on. Namely, advanced wound care, ostomy care, continence & critical care, and infusion care.
CTEC reported a “strong” performance in the three months to 31 March. Group organic revenue increased 6.7%. And all its business segments contributed to the growth. In addition, management said it “executed effectively” on its strategic transformation, as it targets sustainable and profitable growth.
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Trading at 25 times trailing earnings, the market is pricing CTEC for successful delivery of its strategy. Nevertheless, there’s a risk the “significant number of strategic initiatives” the company is pursuing won’t deliver the anticipated growth. If so, the shares could de-rate to a lower earnings multiple. However, I found last week’s update highly encouraging, and I think CTEC could be a good long-term investment for me.
FTSE 250 shares #2
Howden Joinery (LSE: HWDN) is the UK’s leading trade supplier of kitchens. I think its scale and specialisation are competitive advantages. It still has growth to go for in the UK, but is also expanding from a low base in France and Belgium.
Last week’s trading update was for the 16 weeks to 17 April. It was no surprise to see massive increases in revenue compared to the same period last year, which was hit hard by the first Covid lockdown. However, I was impressed by comparisons with the pre-pandemic period in 2019. UK revenue increased 13% (or 9% on a same-depot basis). European revenue increased 38% (or 20% on a same-depot basis).
There are a number of risks to HWDN’s prospects. These include the cyclicality of the construction sector, notably residential housing. Also, the expansion into Europe is still at too early a stage to be sure it’ll be a success. On balance though, I think this could be another good long-term investment for me. HWDN is trading at 32 times last year’s pandemic-depressed earnings.
FTSE 250 shares #3
I’m a big fan of the power of consumer goods brands. PZ Cussons (LSE: PZC) has a strong stable of them. They include Carex, Imperial Leather and St Tropez. The company also has attractive international diversification across both developed and emerging markets.
Last week, PZC reported a 4.7% increase in revenue (at constant currency) for the 13 weeks to 27 February. I liked that all regions grew revenue and profit. This continued the “renewed momentum” in the business after a long period of struggling for growth under its previous chief executive.
PZC has been investing heavily behind its brands in the initial phase of the new CEO’s strategy to return to sustainable profit growth. As it’s still early days, there’s no guarantee the recent momentum will continue. As with CTEC, the shares could de-rate if the strategy doesn’t deliver the growth implied by PZC’s rating of 21 times trailing earnings. However, I like the company’s brands and the new CEO’s approach. As such, this is another FTSE 250 share I think could be a good long-term investment for me.
