Inflation, interest rate rises and Russia’s invasion of Ukraine have weighed on the FTSE 250 in recent months. The current environment presents a number of risks for companies, and it has seen investors favouring near-term returns over growth stocks. But it also presents opportunities.
For me, the two stocks below look like positive additions to my portfolio, offering plenty of upside potential and some dividends.
TBC Bank
TBC Bank (LSE:TBCG) said that profits soared in 2021 but the share price has been dragged down by the invasion of Ukraine. Annual profit more than doubled, driven by strong income and the recovery of the Georgian economy. Pre-tax profit for the year to December 31 rose to £226m, representing a sizeable increase from 2020.
TBC Bank is Georgia’s largest private financial organisation and operates in Georgia, Azerbaijan, Uzbekistan and Israel. While the growth of Georgian business is core to its strategy, the bank has highlighted the importance of its Uzbek operations. “The Uzbek market should give us a competitive edge by providing a material contribution to our growth and diversification over the years to come,” the company said in a statement.
Like other Georgian stocks, TBC’s valuation is heavily linked with the growth in its domestic market. Last year, the country’s economy grew by 14.6%, while average real GDP growth was equal to 16.3% over the year. But growth has been revised (slightly) downwards from initial estimates this year after the Russian invasion of Georgia. Tbilisi has tried to stay out of the conflict in an attempt not to anger its much larger neighbour. Russian sanctions or aggression could be a big issue for TBC Bank. Despite this risk, I’ve recently bought the stock.
Buying at today’s price, I can expect a 2.8% dividend yield. It’s not world-beating, but it’s definitely good to have.
Cambridge Cognition Holdings
Cambridge Cognition Holdings (LSE:COG) has been tipped to grow by analysts. The Cambridge-based neuroscience firm makes specialist software to help design clinical trials. The firm also makes computerised cognitive assessment platforms that are used by hospitals in 100 countries.
Earlier in April, the firm delivered strong results for the year ended 31 December 2021, with revenue growth of 50%. Sales order intake was also a record for the second year running. Gross profit rose 49% to £8.1m for 2021 from £5.4m in 2020. The improved performance was driven by a record number of clinical-trial contracts. According to Singer Capital Markets, Cambridge Cognition Holdings sales should rise 25% over the next year. New products such as NeuroVocalix could be an important part of revenue growth.
Investing in such a small company with a limited product range can be risky, but I’m bullish on this one and am looking to add it to my portfolio. I also think the macro trends will benefit the firm with brain health assessments becoming more important in years to come amid ageing populations, particularly in the West.