FTSE 100 companies have been in the headlines of late, delivering their first sets of results since lockdown ended in England. But there are plenty of FTSE 250 companies producing impressive figures, and I wonder if they have passed under the radar. Here are three reporting on Thursday that I would consider buying in August.
One is Hammerson (LSE: HMSO). And yes, it’s a shopping centre landlord, at a time when the retail sector is only just trying to pick up from its lockdown bruising. The company’s first-half results showed slowing recovery, and the market reacted negatively. The shares lost a couple of a percent in early trading, and are down 63% over two years.
Footfall is still down on pre-pandemic levels, which does not surprise me. And we’re not seeing profit yet, with an IFRS loss of £376m (down from 2020’s £1.1bn). But net debt was cut 16% to £1.9bn, and there’s still £1.5bn in undrawn committed facilities and cash. Hammerson says there is “No significant unsecured refinancing required until 2025.”
There is undoubtedly risk here, as the shape of the retail landscape in the emerging post-pandemic economy is far from certain. But there’s enough safety margin for me. Hammerson is one of my FTSE 250 investment candidates.
FTSE 250 growth stock
Synthomer (LSE: SYNT) is my second pick. The polymer chemicals specialist has seen its shares climb 80% over the past two years. But the wheels did come off an earlier bull phase, as so often happens with early stage growth stocks.
In the half year to 30 June, Synthomer saw underlying revenue climb by 73.7% (with a statutory 67.6% increase). And at the bottom line, EBITDA more than trebled from 2020’s figure to £322.7m. EPS came in at 49.3p, from 10.8p a year ago.
What’s the downside? Well, we could be looking at unusually good growth results as demand catches up from last year’s slump. And we could possibly see some some economic headwinds in the coming years.
But as far as FTSE 250 growth stock prospects go, I think I’m looking at an attractively valued one here. Oh, and there’s a dividend too — upped at the interim from 3p to 8.7p per share.
5G profits
My final pick is Spirent Communications (LSE: SPT), whose interim figures pleased the market. Spirent develops telecommunications equipment, specialising in 5G stuff. So it’s in a growing market, and I see it as something of a ‘picks and shovels’ investment. When there’s a gold rush, those selling the tools can do well whoever strikes the motherlode.
In H1, order intake gained 14%, with revenue up 9%. Adjusted EPS improved by 9%, and Spirent lifted its interim dividend by 10% to 2.39p per share. I like the company, but do I like its growth valuation?
Spirent shares have wobbled a bit in 2021. But over five years, they’ve almost trebled in value. Annualising first-half earnings, we’d be looking at a P/E of close to 21 on an adjusted basis. On reported earnings, it would be closer to 27. So the risk is that the shares are fully valued now, or even over-valued. And it’s a competitive business too.
But on balance, I don’t find that valuation too stretching. Spirent is on my FTSE 250 watchlist.
