With UK stocks reaching record highs in 2025, several FTSE 250 businesses have been on a bit of a rampage. And yet the index as a whole has been rather lacklustre.
Since the start of the year, index investors have earned a mediocre 6%. Dividends push this to 10.4%, but that’s still behind the FTSE 100’s 17.7% gain over the same period. That’s the difference between having £55,200 and £58,850 on an initial £50,000 investment.
But for some stock pickers, the story’s very different.
Some FTSE 250 enterprises are on fire this year. Goodwin (LSE:GDWN) shares are up 75%, Hochschild Mining’s generated a similar 73% capital gain, and Chemring Group’s hot on their tails at 67%.
This basket of businesses alone was enough to transform a £50,000 investment into £85,800 since January. And that’s before counting the extra gains from dividends paid along the way.
So what’s going on?
Inspecting mid-cap performance
The explosive gains of companies like Goodwin are ultimately being offset by other FTSE 250 stocks that have taken a bit of a hit. This includes shares such as Playtech, B&M European Value Retail, and Marshalls, which have all fallen aggressively since the start of the year.
In many cases, the problem appears to stem from being too dependent on the UK economy. And it’s no secret that Britain’s economic landscape is hardly in good shape right now.
With weaker consumer spending, smaller UK-reliant businesses are falling behind international industry titans. But since Goodwin, Hochschild, and Chemring don’t fall into this category, these companies have continued to thrive even with local market headwinds.
Still worth considering
In this type of market environment, it’s the intelligent stock pickers who have the upper hand. By investing exclusively in top-tier mid-cap businesses with strong international exposure, a portfolio gains the potential to outshine index funds.
With that in mind, should investors be eying up some of the recent winners like Goodwin?
Diving into the latest results, it’s not so surprising to see the engineering specialist surge this year. Pre-tax profits jumped 47%, from £24.1m to £35.5m, backed by a 15% bump in revenues. Meanwhile, cash generation essentially doubled, building some tasty liquidity on the balance sheet, and dropping the firm’s gearing from 35.1% to just 9.9%.
In other words, Goodwin’s becoming increasingly profitable, backed by robust fundamentals. And with an impressive series of new contract wins, particularly within the defence sector, this momentum looks primed to continue into 2026 and beyond.
The bottom line
There are still some important risks to keep an eye on. Most notably is the group’s vulnerability to supply chain disruptions in the face of mounting geopolitical and trade tensions. And this includes sensitivity to sudden jumps in shipping costs.
To management’s credit, it does have a dual sourcing policy in place to mitigate such threats – but substantial trade disruptions like those recently seen in the Suez Canal can nonetheless adversely impact the business.
Is the risk worth the potential reward? I think it may be. Goodwin has a long track record of defying expectations. And while the valuation is by no means ‘cheap’, investors comfortable with a bit of volatility may want to dig a little deeper.
But this isn’t the only growth opportunity in the FTSE 250 worth exploring today.
