Stocks that trade at 52-week highs or lows can present a good buying opportunity. Shares at low levels can be a value purchase. Yet it’s important not to forget stocks that are rising quickly. Here are some FTSE 250 stocks that have strong momentum right now and could continue to propel higher.
Beefing up defence
First up is Babcock International (LSE:BAB). The stock is up 50% over the past year, and took another jump higher at the start of this year.
It doesn’t come as a great surprise to me that an aerospace and defence company is doing well right now. The world isn’t a safe place, with global conflicts threatening to spill over at any moment. This is causing governments around the world to increase defence spending.
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For example, in October, Babcock secured £3.95bn in funding as part of helping with the UK’s next-generation nuclear-powered attack submarine. The half-year report also flagged up the delivery of more helicopters to the French Navy as part of a 10-year contract.
Underlying profit jumped 27% in the latest half-year report versus the same period a year back. This partly helped in reinstating the dividend, the first since 2020.
A risk is that the firm is reliant on some large clients. If it loses just a few key ones, revenue could be significantly impacted.
Ultimately, I think the stock could continue to move higher, as I only see defence spending increasing further.
Wind in the sails
The other company at 52-week highs is Clarkson (LSE:CKN). The shipbroking service provider isn’t the first company that might come to mind when you think of hot stocks right now. Yet the stock is up 11% over the past year, with a sharp jump over the past couple of months.
Part of this can be attributed to the trading update that recently came out. It commented that thanks to a strong Q4 performance from the broking division, it now expects full-year underlying profit before tax to be no less than £108m.
This would mark an increase from the £100.9m figure from last year, which in itself was a 45.4% jump from 2021. Exceeding expectations for earnings is always a good sign, often leading to share price gains as a result.
Yet even at current levels, the price-to-earnings ratio is only 13.04. I wouldn’t classify this as high, and so I think there’s room for the stock to rally further before it starts to flag up as overbought.
One concern I do have is that this is an area I have no expertise in. My knowledge in the business operations is limited, which isn’t always a good thing if I’m considering buying.
Both firms are in a strong position at the moment. If I had spare money, I’d consider investing in both.
