March has seen the FTSE 250 continue its recent gains. Despite a brief wobble at the start of the month, the index has gained around 8% this year. While it has still got a way to go to get back to the highs seen last May, momentum seems to be in the right direction.
So what’s been driving recent gains? Certainly an easing in macroeconomic concerns has helped, including a cooldown in the US-China trade war. And there have been some impressive moves - in some cases triple digit - from tech, retail and media companies. So which stocks have made traders sit up and take notice?
IT services and infrastructure provider Softcat [SCT] reported steller six month results to the end of 31 January last week.
Group sales climbed by a fifth to £434 million. Hardware sales were the biggest growth area, up by 24.7% to £195 million. Software sales grew 19.4% to £200.9 million while the services business jumped 13.5% to £38.1 million. Shareholders were rewarded with a dividend of 4.5p a share.
Hardware sales growth HY2 2018
Commenting on the results, CEO Graeme Watt highlighted that the company had increased market share. For the period in question, the reseller had added 620 customers to its already sizeable 10,000 plus database, with gross profit per customer growing by almost 20%.
News of the results caused the stock to jump 5.1% - over the past five years it’s up a monster 193%. City analysts have taken note. Credit Suisse upgraded the stock and commented that it expects EPS to grow 4% this year, and 5% in 2020.
JD Sports Fashion [JD] has been on a mergers and acquisition quest.
This month the high street staple acquired rival Footasylum in a cash deal that valued the firm at £90.1 million. The move gives JD Sports greater exposure to the lucrative 16 to 24 year old market. For Footasylum, news of the takeover saw its share price rocket 74%.
Footasylum joins US sports retailer The Finish Line in the list of companies gobbled up by JD Sport. The Finish Line was picked up last year in a deal JD Sports described as 'transformational' for its business, and not without good reason. The acquisition gives the UK sports retailer an instant foothold in the US with 550 stateside stores and 365 concession stands, including one at Macy's.
|PE ratio (TTM)||18.59|
|Quarterly earnings growth (YoY)||24.30%|
JD Sports stock vitals, Yahoo finance, as at 25 March 2019
Half-year results for 2018 saw JD Sports pull in £123.9 million in revenue, up 20% from the same period in 2017. The Finish Line contributed £4.8 million in the first seven weeks post acquisition.
It's been a good time for JD Sports. The chain has ridden the 'athleisure' craze to deliver a 5% year-on-year rise in sales over the festive period. Since the start of the year the stock is up 38% and the future looks bright with backing from blue chip investors including J.P. Morgan and Schroders.
It could be only a matter of time until JD Sports knocks on the door of the FTSE 100.
Canadian media company Entertainment One [ETO] might not be a household name, but the share price has climbed 195% in the past two years.Entertainment One 1-year share price performance, CMC Markets, as at 25 March 2019
Behind the growth has been its ability to produce must-watch kids TV programming. Peppa Pig, its most recognisable property, has driven earnings in Entertainment One's family division to a projected 50% gain year-on-year by the end of March. Since this time last year, shares in Entertainment One are up a sizable 51%.
One concern for investors will be the company's failure to grow earnings per share, which have actually fallen over the last three years. Still, analysts expect the share price to grow around 10% each year over the next two years.
Disclaimer Past performance is not a reliable indicator of future results.
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