The dogs of the FTSE 250 refers to the worst performing stocks in the index over a period of time. I’m looking at the time period of the past three months to see whether it makes sense for me to buy the dip or spot a value stock. Here’s one that I’m avoiding, but also one that I think could be a smart purchase.
Troubles from war
Let’s start with the one I wouldn’t touch. It’s Ferrexpo (LSE:FXPO), the iron ore pellet producer. The stock is down 38% over the past three months, extending the 55% drop over the past year.
The firm has been in a sorry state, negatively impacted by the war in Ukraine. Given that the business has three iron ore mines and an iron ore pellet production facility in the country, operations have been extremely difficult.
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To put the financial impact into perspective, back in 2021 the full-year revenue was just over $2.5bn. For 2023, this fell to $651m. It’s a huge drop, with the 2023 report stating that “our people and our
business continue to be severely affected”.
Although I’m not criticising the company, I don’t see how I can invest in the firm until we get a resolution to the war. Until then, I can only see the share price falling further.
Granted, I could be wrong, with the share price potentially rallying due to a significant boost to iron ore prices or some unexpected events.
A dip to consider
On the other hand, I do like Bridgepoint Group (LSE:BPT). Even though the stock is down 15% over the past three months, I think it’s a dip worth buying. Over the past year, the stock is up 8%.
There doesn’t appear to be any clear cut reasons behind the slide lower in recent months. True, the 2023 results that came out in March weren’t as strong as some might have expected. Profit was up 12% versus the previous year, which is still a solid performance in my eyes.
I do get that some investors don’t want to get involved in private equity and private credit right now. With the stock market being quite uncertain, having money tied up in private equity that can’t easily be sold for cash isn’t that appealing. Plus, with higher interest rates, the potential for default on credit can increase.
Even with these risks, the business is doing very well. In fact, assets under management (a key metric for growth) increased by 7% from last year, to hit $44.7bn. Given the size that the group has, spread with offices around the world, I think it’s very well placed to push on. When I zoom out, the picture is still rosy.
On that basis, I’m thinking about buying the stock for my portfolio shortly.
