Key points
- Endeavour Mining’s revenue increased from $1.4bn to $2.7bn between the 2020 and 2021 calendar years
- Clarkson’s EPS grew from 116.8p to 165.6p between the 2017 and 2021 calendar years
- Both firms exhibit consistent growth and have favourable business environments
The FTSE 250 is full of exciting and high-performance companies. Every so often, I scour the index for high-quality growth stocks to add to my long-term portfolio. I think I’ve found two firms that fit the bill. One is a gold mining company operating in parts of Africa, and the other is a well-established global shipping business. Why do I think that I should buy shares in both of these companies? Let’s take a closer look.
A FTSE 250 gold miner
The first company, Endeavour Mining (LSE:EDV), operates mines in the Ivory Coast, Burkina Faso, and Mali. Founded in 1988, it publicly listed in June 2021 and joined the FTSE 250 index. It is possible that the business will join the FTSE 100 imminently. It currently trades at 2,020p.
Having only listed last year, access to long-term historical results is limited. Between the 2020 and 2021 calendar years, however, progress is visible. During this period, revenue increased from $1.4bn to $2.7bn.
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In addition, profit before tax nearly doubled, growing from $219m to $424m. Furthermore, earnings-per-share (EPS) rose slightly from ¢236 to ¢240.
On the other hand, operating cash flow per share decreased over this period from $5.15 to $4.89.
Despite this, the business announced the sale of its Karma Mine in Burkina Faso for $25m in March 2022. This sale means management can now focus on “high-margin, long-life and low all-in sustaining cost, core assets”, according to CEO Sébastien de Montessus.
A consistent shipping firm
The second company I’m buying is Clarkson (LSE:CKN), a UK-based shipping business operating worldwide. While it specialises in the broking of ships and cargo, it also operates a financial division. It currently trades at 3,565p, up 39% in the past year.
Between the 2017 and 2021 calendar years, revenue increased from £324m to £443.3m. Furthermore, profit before tax grew from £45.4m to £69.1m.
Unsurprisingly, EPS over this period rose from 116.8p to 165.6p. As a potential shareholder, it gives me confidence to see that this firm is performing for its shareholders year in, year out.
In December 2021, the company again raised profit guidance. This was primarily due to significantly higher shipping rates, because of markedly higher demand during the Covid-19 pandemic. Compounding this is the lower shipbuilding capacity of many yards across the world. These yards are still unable to return to pre-pandemic capacity and this is tightening the supply side.
While the business expects this supply/demand dynamic to continue, I am slightly concerned that a return to normality will bring with it less demand and greater supply. This may negatively impact shipping rates and, ultimately, the Clarkson share price.
Overall, I like both of these firms. They exhibit consistent growth and are enjoying favourable environments going forward. In an effort to achieve long-term growth, I will be buying shares in both businesses today.
