Within the most traded stocks over the course of a usual week, I’d expect to see the likes of Lloyds Banking Group and Rolls-Royce. These are retail investor favourites.
Yet just because these firms get a lot of coverage, it doesn’t mean they’re the best performers. In fact, there can be growth stocks that are relatively unheard of that can surprise some with share price returns.
Here’s one I’ve spotted!
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A banking stock under the radar
The company is the Bank of Georgia (LSE:BGEO). The FTSE 250-listed stock is up an impressive 122% over the past year. In fact, this makes it the best performing share in the entire index over this period.
As the name suggests, the bank operates in Georgia, with a retail and corporate banking presence. It also owns a separate bank in Belarus. Despite being large by the standards of Georgia (it serves 2.6m customers), it often goes under the radar when UK investors look for banks to invest in.
This is because those thinking about FTSE bank stocks usually have a home bias. Most prefer to invest in a business they know, and if you’ve seen a high street branch of a particular bank, it’ll be more appealing to invest in.
Further, there are plenty of larger FTSE 100 banks for investors to consider, so the Bank of Georgia naturally falls under all of these.
Why it’s performed so well
Even though not many people are talking about the stock, everyone wants to talk about how to double their money in a year. The Bank of Georgia has shown strong growth that has helped to push the share price higher.
Fundamentally, the financial results coming out from the bank have been very good. The 2022 annual report showed how it had grown market share by 6.7% versus the previous year, now at a strong 51.3%.
What impressed me the most was the increase was in both net interest income and non-net interest income. Higher interest rates naturally have helped interest income to rise. Yet to grow non-net interest income (such as via investment product sales) is a great sign. It helped to push profit up by 55.7% year-on-year.
Not married to the UK
An important point to consider is the fact that the bank isn’t tied to the fate of the UK economy. It might be listed over here, but it’s the Georgian economy that will drive growth for the business. To that end, the local economy (even though it’s small) is doing well. Granted, a risk to the stock is the fragile nature of the local emerging economy in years to come.
There’s still a lot of uncertainty about the UK economy this year. Last week, data showed that inflation is still running in double digits. With GDP growth patchy, it doesn’t set UK banks up to have an outstanding year.
Therefore, I think that investors should consider adding the Bank of Georgia as a good diversifier to a UK portfolio. Even with the share price doubling, I feel the momentum it has can carry it even further from here.
