The FTSE 250 the is smaller brother of the main London index. That means that it contains many companies that are up and coming.
Often, these emerging companies are in growth mode. That’s why I think it can be a good place to look for growth stories. Here are two FTSE 250 shares I think could grow in the coming years.
A FTSE 250 choice for post-pandemic growth
Pub operator JD Wetherspoon (LSE: JDW) has not had a good year. With lockdowns lasting months in Britain, the company’s focus on the UK pub sector has turned from a positive to a negative. Several capital raises have helped shore up finances, but have underlined how precarious the hospitality sector’s fortunes have become.
The short-term outlook for pubs remains unclear, but business in much of the UK looks set to restart in the next several months. While some operators will have given up, I expect Wetherspoon to reopen with a vengeance. During the last downturn, it took advantage of the chance to buy up closed hostelries on the cheap. We could see the same again this time.
The company has a proven formula. Last year was the first year it reported a loss since the 1980s. Its buying scale means it can sustain low prices to drive demand – a virtuous circle. I expect many pubgoers to be keen to get back to their local once it’s open. But it may be that the pandemic has changed some people’s willingness to socialise, or to spend. So the chain could struggle to achieve sales at its former level.
This FTSE 250 company has experienced, highly skilled management and chief executive Tim Martin is a significant shareholder. I am looking for them to navigate the emergence from lockdown successfully. I would pick Wetherspoon’s for medium- to long-term growth prospects.
A growing self-storage brand
Another company I am eyeing for growth specialises in self-storage. Self-storage is a fairly simple business to run. As people accumulate more possessions, the sector can grow significantly, as seen in the US. Small businesses also often find self-storage a convenient place to keep stock and samples.
I expect that self-storage will continue to grow in the UK for many years because of these trends. In this space, I like the storage operator Big Yellow Group (LSE: BYG) as well as Safestore. Big Yellow’s distinctively branded yellow sites help build brand awareness among target customers.
Yielding close to 3%, the FTSE 250 company’s revenues continue to grow. In a trading statement last month, the lettable area was up 4.8% and closing occupancy was up 8.8%. Like-for-like revenue for the quarter increased 6.6%. That’s exactly what I am looking for in the self-storage sector: steady growth at a level which won’t be too fast for the business to sustain.
The trend for self-storage might not last. Plus, profits could be hurt if too many companies operate space and pricing power diminishes. But, just as I once tucked my goods away in a Big Yellow unit, I’d now be happy to park my money in the company’s shares in hope of future growth.
