We have a heavy dose of FTSE 250 news coming our way in September, and I’m making a list of the ones I want to examine closely. Here are another three, all of which I’ve looked at in the past, but none I’ve ever got round to buying.
Ashmore (LSE:ASHM) was on a storming run before Covid-19 arrived. It’s shares were on a 12-month gain of 40% immediately prior to the crash. Ashmore is an investment manager specialising in emerging markets. Yes, those emerging markets, hard hit by the coronavirus and lacking the first-world resources to deal with it.
It’s no surprise then that since mid-February 2020, the Ashmore share price is down nearly 30%. The FTSE 250 index meanwhile, has recovered to a 10% gain. On the upside though, times like these can provide great opportunities to invest in quality companies while they’re cheap. That is, providing they survive with sufficient liquidity.
Ashmore looks to be in a strong position on that front, and assets under management grew in the fourth quarter. Full-year results are due on 3 September, so we’ll know more then. Investing in emerging markets is risky at the best of times, and they may be the slowest to properly recover. But Ashmore is on my growing shortlist.
Pills and potions profits
Some pharmaceutical companies have done well during the pandemic, some not so well. Dechra Pharmaceuticals (LSE: DPH) is firmly in the first group. Its shares are up 75% over two years, and up nearly 300% over five. But what’s so surprising about that during Covid-19 days?
Well, the FTSE 250 veterinary medicines specialist isn’t even in the human market, never mind anything to do with coronaviruses. All this progress has come from its work for cats, dogs and horses. It’s clearly a lucrative market, as July’s year-end trading update makes clear. Revenue rose by 18%, with strong international progress. European revenue grew 20%, with a 22% increase in the USA.
The risk is that Dechra shares might be overvalued now, and they do seem to be pushing their way to high-growth P/E multiples. Should we see a future period when the figures fail to meet expectations, could the share price fall? It might. But I’m going to wait for full-year results on 6 September before I make up my mind.
Lagging the FTSE 250
If the financial and pharmaceutical sectors carry high risk, surely soap is a safe business? That’s what I think when I look at PZ Cussons (LSE: PZC), ahead of final results due on 22 September. The problem is, we’ve seen earnings deteriorating for the past few years, with a corresponding dip in the dividend.
But in its July update, the company said pre-tax profit is “expected to be ahead of consensus and the prior year.” Revenue is up 7%, margins are improving, and the balance sheet is apparently better too. Cussons says net debt is falling, and lower than last year. I’ll need to see the actual numbers, but I find that encouraging.
The share price has badly lagged the FTSE 250 over the past five years, dropping nearly 30%, while the index has grown by a similar percentage. Over the past two years though, the two are closer. Is Cussons good value now? I’ll make my mind up when I see the results.