While the UK economy is far from firing on all cylinders, the home-focused FTSE 250 index has climbed just under 7% in value since January (and 13% in the last 12 months).
However, this is nothing compared to the performance of some of its constituents.
Magical stock
Harry Potter has been a literary phenomenon. Even so, I suspect many people won’t be aware that the company getting the books into readers’ hands is listed on our stock market. That’s Bloomsbury Publishing (LSE: BMY) and it’s been a superb investment for the last few years.
Since September 2019, the shares price is up a spell-binding 186%. But just buying the stock in January would still have delivered a 42% gain.
Oh, and there have been dividends on top of this!
Lockdown star
Bloomsbury’s purple patch really kicked off during the pandemic. Sent behind our doors, many of us fell back into the habit of reading for leisure and earnings boomed.
In contrast to other activities, this trend has endured since the bug was sent packing. Even a cost-of-living crisis doesn’t appear to have impacted momentum. In fact, the mid-cap has been busy upgrading guidance.
The big question is how much of this is now priced in.
More to come?
As I type, Bloomsbury stock changes hands for 20 times FY25 earnings. That’s more than the average across UK stocks.
One could also argue that publishers can’t really predict which titles will be successful and that profits are overly-dependent on a small group of very popular authors. And writing books takes time.
On the other hand, management’s efforts to grow the company’s academic arm by prioritising international sales, subject area expansion and digital scholarship could pay off. The balance sheet also looks pretty robust to me, with a decent net cash position.
All told, Bloomsbury continues to present as a quality business. But it’s also one I’d prefer to pick up during a period of general market malaise.
Stunning gains
Another stock delivering the goods for private investors willing to stray off the beaten track has been CMC Markets (LSE: CMCX).
Shares in the online trading platform provider have rocketed nearly 190% this year. Again, this doesn’t take into account the dividends received over the period (8.3p per share).
There have been a number of catalysts for this incredible return. Chief among these has been an increase in trading activity among clients as markets have become more choppy. In it’s most recent update, the company maintained its guidance on full-year operating profit of between £320m and £360m.
But investors have also been cheering news of potential partnerships, product launches, and a sustained period of cost-cutting.
Risky pick
As brilliant as recent returns have been, one does need to be aware that longer-term holders of CMC have endured a lot of pain. Between April 2021 and October 2023, the stock crashed by over 80% as the pandemic trading boom subsided.
It’s also worth noting that the share price has been drifting sideways for a couple of months. Perhaps it might take an earnings upgrade to move higher. In the absence of a significant geo-political event, I’m not convinced that will happen when half-year numbers are announced in November.
For this reason, CMC also stays on my watchlist.
