Which stock is worth of promotion to the FTSE 250 — or, indeed, demotion from the FTSE 100? Some of our freelance writers list their candidates below.
Alpha Group International
What it does: Alpha Group provides financial solutions for businesses, including currency risk management, international payments, and funding.
By Zaven Boyrazian. Currency risk management isn’t the most exciting topic. But it’s a critical aspect of any business with international operations. And it’s proving to be a lucrative niche for Alpha Group International (LSE:ALPH).
With the company now making impressive strides into alternative banking, its top and bottom line have been expanding rapidly at a double-digit rate.
So, it’s not surprising that the share price has climbed nearly 300% in the last five years, placing its market cap just shy of £1bn. That’s already bigger than multiple FTSE 250 stocks, suggesting it may be next in line to join the UK’s flagship growth index.
Of course, the company still has hurdles to overcome. Currency hedging is a complex process that can do more harm than good when executed poorly. Meanwhile, alternative banking introduces a host of regulatory compliance challenges.
Nevertheless, the firm remains on track for a prosperous future, in my opinion. That’s why it’s already one of the biggest positions in my portfolio.
Zaven Boyrazian owns shares in Alpha Group International.
Bloomsbury Publishing
What it does: Bloomsbury Publishing is an independent publishing house with multiple divisions including Adult Trade and Academic & Professional.
By Paul Summers: A book publisher may not quicken the pulse like a snazzy tech stock. However, shares in Bloomsbury (LSE:BMY) have been on an absolute tear since the pandemic.
This momentum shows no sign of slowing. Back in May, the company posted record full-year sales and profits that were ahead of recently upgraded expectations.
Part of the reason for this is down to its unusual strategy of catering to both consumer and academic markets. A commitment to growing digital revenues has also helped.
With a plan to expand globally and a solid balance sheet, I think this firm is FTSE 250-bound.
Even so, Bloomsbury’s small-cap status could mean that it’s thrown out with the bathwater by investors in the event of a UK recession.
Encouraging more people to choose books over video games and streaming is also an uphill struggle.
Paul Summers has no position in Bloomsbury Publishing.
Card Factory
What it does: Card Factory is the UK’s leading specialist retailer of cards, gifts and celebration essentials.
By Jon Smith. Card Factory (LSE:CARD) has enjoyed a very strong past year and has bucked the broader trend of retailers struggling on the high street. With a network of over 1,000 stores around the UK & Ireland, the company has succeeded in growing revenue and profits back after the pandemic. In fact, 2022 full-year revenue was up 27% year-on-year and finally broke above the 2019 figure.
With the share price up 84% over the last year, I feel it’s only a matter of time before the company knocks on the door of the FTSE 250. I think the outlook is promising, mainly because of the price point of greeting cards and other related gifts. It’s an affordable present for many, even with the cost-of-living crisis.
As a risk, the business has tried to solve for inflation by raising prices. It needs to be careful about continuing to do this as it could hamper demand.
Jon Smith does not own shares in Card Factory.
Rightmove
What it does: Rightmove is an online real estate company, and the UK’s largest property portal.
By Alan Oscroft. Rightmove (LSE:RMV) shares are pretty much where they were five years ago. But they’ve been volatile along the way.
Since the end of 2021, they’ve been sliding. And I don’t think it would take much more to push the stock out of the FTSE 100 and into the FTSE 250.
It’s due to falling house prices and soaring mortgage costs. We’ve already seen Purplebricks squeezed out of the market, as competition has pushed down estate agent fees.
Rightmove seems to be trading well enough, and I really don’t see much long-term threat to its business.
But even with the share price fallen, we’re still looking at a trailing price-to-earnings (P/E) ratio of about 22. I think that’s high. And with a yield of only 1.7%, the dividend doesn’t make up for such a lofty rating.
So, I think this is a fine company, but I just reckon it’s overvalued right now.
Alan Oscroft does not own Rightmove shares.
