Insider: buying a winter winner plus big sales in the FTSE 250

The long-serving directors behind winter portfolio stock discoverIE Group (LSE:DSCV) have spent £250,000 backing the customised industrial electronics firm for more seasonal success.

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Since their respective arrivals in 2009 and 2010, chief executive Nick Jefferies and finance boss Simon Gibbins have doubled the FTSE 250 company’s dividend and achieved a total shareholder return of 400% in the decade up to this year.

Their record of share price growth in nine of the past 10 November-to-April periods has merited inclusion in the past two editions of Wild’s Consistent Winter Portfolio.

The company's 2023-2024 performance involved some volatile trading, but the shares still ended the winter with a return of more than 14%. Overall, the basket of five FTSE 350 companies in the portfolio returned an impressive 26.8% including dividends.

The 2024/25 portfolio will be disclosed at the end of this month. However, the shares are already showing signs of winter momentum having posted a strong performance last week.

This followed the company’s half-year update, which showed that destocking by major industrial customers due to earlier supply chain imbalances slowed in the second quarter. This narrowed the sales decline to 7% from the first quarter’s 12% reverse.

Tight control of costs and working capital have kept the company on track for this year’s target of a 13.5% underlying operating margin and 15% over the medium term.

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Its recent success has been built on organic growth and a record of £470 million spent on 26 “carefully selected and well-integrated acquisitions” over the past 13 years.

Revenues from continuing operations have increased from £10 million in 2010 to this year’s £437 million, with three-quarters now coming from its target markets of renewable energy, transportation, medical and industrial & connectivity.

Leading customers include wind power firm Vestas and technology solutions business Leidos.

Among the scenarios at a recent capital markets day, the company outlined a central projection for 6% organic annual revenues growth and £350 million of M&A spend up to 2029.

Peel Hunt, which has a price target of 1,000p, said afterwards that this would leave the company trading on eight times forecast 2029 earnings. It added after last week’s trading update that the shares remain cheap on any of the growth scenarios put forward at the investor event.

The broker said: “There has been some lumpiness, reflecting the broader environment, though order flow and commentary give us confidence that the destocking cycle is closer to improving.”

Shore Capital believes discoverIE is well-placed to benefit from a range of long-term trends in its target markets, including an increase in AI and sensing in the medical sector.

However, with shares on 15.9 times its 2025 forecast earnings the City firm sees more upside elsewhere and highlights Renew, Spectris and Hill & Smith as attractive alternatives.

The broker added: “The organic performance over the past 24 months has been relatively soft, in our view, albeit under difficult market conditions.”

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Deutsche Bank is also cautious after reducing its target price to 765p, noting that while consensus revenue forecasts for 2025 have declined by 11% in the past year, the estimates for operating profits have increased by 2%.

The shares traded at 672p on Friday which compares with 633.1p when CEO Jefferies spent £200,000 increasing his stake to 1.35% shortly after the company’s trading update.

Finance boss Gibbins made an investment of almost £50,000, while non-executive directors Clive Watson and Celia Baxter purchased shares worth £25,000 and £30,000.

Big sellers here

The finance chiefs of top-performing FTSE 250 stocks XPS Pensions Group (LSE:XPS) and Bellway (LSE:BWY) have capitalised on their success by selling shares worth £224,000 and £890,000 respectively.

The latter disposal involving Keith Adey took place after annual results by the Newcastle-based builder highlighted an improved order book of 5,109 homes at the start of October.

Bellway said it had an “excellent platform” to deliver a material increase in volume output in the new financial year, having seen profits fall 57.5% to £226.1 million in 2023/24.

Shares are up 25% year-to-date, with Adey’s sale taking place at a three-year high of 3,256.9p. UBS last week lifted its price target to 3,765p, highlighting the company’s exposure to attractive multi-year organic volume growth and track record of execution.

Meanwhile, Snehal Shah sold 66,830 shares in XPS Pensions at a record price of 335p after the consulting and administration business lifted profit guidance in a strong half-year update.

With regulatory changes continuing to support strong client demand for its services, the company’s shares have risen by more than 50% this year.

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Co-chief executive Paul Cuff said of the trading performance: “We grew strongly in the two prior years, so to achieve further like-for-like growth of over 20% in addition to that is very pleasing.”

Shah joined the company in 2019 and retains a material stake amounting to 210,951 shares equivalent to 232% of salary, as well as 646,030 unvested options.

Shares stood at 358p on Friday, with joint house broker Canaccord Genuity waiting for the details of the Budget before refining forecasts.

However, it added: “The market share opportunity within the pensions industry is significant and the adjacent insurance industry could offer another material growth runway in the fullness of time.”