Stock market rally! I think these FTSE 250 growth shares will continue rising in 2021

The FTSE 250 has been in solid form recently, rising 22% since the beginning of November. While no one knows what the future holds, I suspect there are more gains ahead if the UK’s vaccination programme proceeds as planned.

Today, I’m looking at two solid growth stocks that should contribute to this ongoing rally. As luck would have it, both also reported to the market this morning. 

FTSE 250 flyer

As stock market sentiment improves, online investment platform AJ Bell (LSE: AJB) has welcomed yet more customers over the final three months of 2020. The number of people using its services moved 6% higher in the quarter, bringing the total to a little over 312,000 — a 30% rise over 2020.

Total net inflows also jumped 100% to £1.6bn and total assets under administration climbed 11% in the quarter to £65.2bn. 

As good as these numbers are, shares in AJ Bell were pretty much flat in early trading. This would suggest the market had already priced in today’s news. That’s not altogether surprising when you consider the stock has already climbed nearly 90% since last March’s market crash. The fact AJB was trading at 50 times forecast earnings before today’s statement may also have deterred would-be investors. 

Is that valuation too rich? Possibly. If 2021 proves to be tougher than expected, it’s likely highly-priced UK companies will be hit the hardest. 

Then again, there’s little doubt that AJ Bell is a quality business. It consistently generates great returns on capital and sky-high operating margins. It’s also got a shedload of cash on its balance sheet. Valued at less than £2bn, the company has a lot more room to grow than its near-£8bn-cap FTSE 100 peer Hargreaves Lansdown.

As things stand, I’m more than happy to continue holding and will look to add on any weakness. 

Resilient earnings

Another share supporting the FTSE 250’s recovery over recent months has been pet product retailer and veterinary services provider Pets At Home (LSE: PETS). Like AJ Bell, I suspect the shares will continue to reward investors long after the coronavirus storm has passed.

Today’s Q3 trading update — covering the 12 weeks to the end of 2020 — showed total revenue had grown 18% to £302m. Based on this performance, Pets maintained its previous guidance and expects to generate “at least £77m” in pre-tax profit for the full financial year.

And the shares? Like AJ Bell, Pets at Home has been in great form. Those investing at the depths of the coronavirus crash would have doubled their money. The question is whether there’s more to come in 2021. 

Naturally, nothing rises in a straight line and there may be some profit-taking in the weeks ahead. An undeniably punchy valuation of 32 times forecast earnings may also lead some growth-focused investors to refrain from loading up on the stock for now. 

Notwithstanding this, I struggle to see why the share price won’t continue to rise over time. After all, spending on furry companions tends to remain resilient, even in tough economic times. What’s more, the boom in pet ownership over the pandemic should mean the FTSE 250 member continues to attract and retain customers through its membership and subscription services.

Factor in the possible rollout of new stores inside the M25 and further gains in 2021 certainly aren’t out of the question.