Pick of the FTSE 250: three shares up 10% or more today

Having suffered their ups and downs, this trio is flying high and generating big returns for investors. City writer Graeme Evans explains why.

3rd December 2024 16:02

by Graeme Evans from interactive investor

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A turnaround Tuesday for corporate results today left the value of Victrex (LSE:VCT), discoverIE Group (LSE:DSCV) and SSP Group (LSE:SSPG) more than 12% higher as investors jumped back on board after recent selling.

The trio were joined at the top of the FTSE 250 by sandwich maker Greencore Group (LSE:GNC), while the FTSE All-Share companies On The Beach Group (LSE:OTB) and Marston's (LSE:MARS) completed an overwhelmingly positive session for mid and small-cap company reporting.

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Their encouraging updates boosted wider risk appetite heading into the new calendar year as the All-Share index rallied 26 points to revisit the record level seen in the summer.

One of the most-traded stocks was the airport and railway station catering firm SSP after it reported an encouraging start to its new financial year, with like-for-like sales growth of 5%.

It also set out its profit recovery plan for continental Europe after a weak summer in Germany and France held up an otherwise robust group performance in the 2023-24 year.

SSP envisages growing the European profit margin from 1.5% to approximately 3% in 2025, rising to 5% in the medium term.

The company backed up its confidence in cash generation by announcing a final dividend of 2.3p, lifting the total for the year by 40% to 3.5p and a pay-out ratio of 35%.

Analysts at Jefferies said the fact that momentum has continued into the current financial year should provide reassurance, particularly in the context of a weak year-to-date share price.

The stock is still 20% lower in 2024, despite today’s jump of 19.6p to 181.7p.

Jefferies has a target price of 270p, noting that SSP's valuation has been at a 50% discount to the pre-Covid price/earnings multiple.

It added: “A positive inflection in the forecast earnings per share (EPS) trajectory is likely required to drive the share price, with indications from guidance today implying that EPS downgrades have now troughed.”

The customised industrial electronics firm discoverIE jumped 100p to 733p after half-year results showed an operating margin of 13.8%, a figure ahead of its full-year target of 13.5% as the company works on a plan to achieve 15% in the medium term.

The surge for shares will be welcomed by followers of Wild’s Consistent Winter Portfolio, given that discoverIE is one of the constituents following its seasonal record of growth in nine of the past 10 November to April periods.

The FTSE 250-listed stock currently stands 12% higher than at the end of October, having fallen as low as 577p earlier in that month.

The shares have been on an upward curve ever since an update showed that destocking by industrial customers due to earlier supply chain imbalances had slowed in the second quarter.

Today’s results reported current quarter trading in line with expectations, with an orders run rate ahead of sales and ahead of the previous three-month period.

Chief executive Nick Jefferies said the company had been successful controlling costs in response to lower production volumes, which along with ongoing efficiency initiatives and acquisitions has more than offset lower sales.

He added: “This is a great strength of the business that has delivered improved underlying operating profits and margins in each of the last 10 years (in-line in the Covid year).”

About three-quarters of its revenues now come from its target markets of renewable energy, transportation, medical and industrial & connectivity. Leading customers include wind power firm Vestas and technology solutions business Leidos.

Peel Hunt reiterated its price target of 1,000p following the results, while Shore Capital removed this summer’s Sell recommendation as it now sees less risk of a profit downgrade for 2025.

The performance of Victrex brought relief to investors after the ongoing impact of a period of industry destocking left its share down as much as 40% this year.

The specialist in high-performance polymer solutions used by industries including automotive, aerospace and medical reported a stronger-than-expected finish to the financial year and said trading in the new period had been solid.

Cash generation has improved significantly, which together with completed investments in the UK and China has created the potential for incremental shareholder returns.

An unchanged final dividend of 46.14p a share is due to be distributed in February, leading to a yield of 7%.

For the medium to long term, the company reiterated its confidence in delivering growth. It said: “We have a diversified core business, increasing mega-programme commercialisation, well invested assets and the opportunity for cash flow improvement."

These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.

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