There are three FTSE 250 growth stocks I’d invest £500 in today.
FTSE 250 growth
The first is magazine publisher Future (LSE: FUTR). What I like about this business is the fact it has a consistent growth track record.
Over the past five years, management has steered the business from acquisition to acquisition. These deals have helped the firm build a strong portfolio of publishing assets. This, in turn, has attracted advertisers to its platform. By increasing the number of publications it owns, Future has been able to offer advertisers a better package, which has led to increased revenues and profits for the group.
The next acquisition is the owner of GoCompare. While this is larger than anything Future has completed before, I think it’s a sensible decision. The deal will take the company into the highly lucrative comparison market, where it can use its existing clout to drive better deals with advertisers.
As such, I reckon this FTSE 250 growth stock can continue to produce high total returns for investors.
Race for space
One major trend that’s emerged this year is the so-called ‘race for space’. Homebuyers have been rushing to snap up properties with large gardens, which has pushed up prices in the most desirable areas. It’s also pushed up sales of DIY and home improvement products. That’s been a boon for Marshalls (LSE: MSLH).
The FTSE 250 supplier of hard landscaping products recently reported sales to the domestic end of the market were up 10% year-on-year during the four months to the end of October. This improvement allowed the group to repay all furlough monies received by the government during 2020, as its financial position was better than expected.
I think this year’s trading performance is going to help the group meet its near-term goals. For example, the company’s debt has fallen, which should provide it with more financial firepower to chase growth in the years ahead. At the same time, the UK’s buoyant housing market may lead to increased demand for its landscaping products.
Based on these tailwinds, I’m optimistic about the group’s long-term potential.
Insurance income
The coronavirus pandemic has also forced significant changes on the insurance industry. Claims related to the pandemic have cost the sector hundreds of billions of dollars, and companies have reacted by increasing the prices they charge to clients.
This could be good news for FTSE 250 group Lancashire Holdings (LSE: LRE). The specialist insurance organisation managed to avoid the worst of the pandemic, but it’s still going to benefit from rising insurance prices. It recently raised money from investors to capitalise on the improving market environment, and that suggests the company could see strong earnings growth in 2021.
Lancashire has an impressive history of profitable underwriting. When many other companies have struggled, it has still turned a profit. What’s more, the business tends to return almost all of its net income to investors with dividends. In the past, that’s produced a dividend yield of nearly 10%.
While the company won’t be returning extra cash to investors over the next 12 months, I think the business will resume this policy in the next few years.