With this in mind, here are three such shares from the FTSE 250 I’d add to my ISA portfolio today.

TI Fluid Systems

TI Fluid Systems (LSE: TIFS) is the go-to option for car manufacturers looking for components to move fluids around inside their vehicles. Its operations stretch over 28 countries, giving the company great geographical diversification. However, the chief reason it’s caught my eye is that it looks very attractively-priced for the growth on offer.  

Right now, I can pick up the stock for under 16 times earnings. That already looks pretty decent value, relative to the levels of some stocks in the FTSE 250. And the price-to-earnings growth (PEG) ratio for FY21 is just 0.3. As a general rule of thumb, anything at or below 1.0 on this metric suggests the market is undervaluing the company. 

Of course, numbers never tell the full story. A key risk with TIFS is that it could be impacted by the ongoing issues with supply chains currently dogging the automotive sector.

Another thing worth mentioning is the ‘free float’. A relatively low number of shares (as a percentage of total equity) currently trade on the market. Theoretically, this could make TIFS’ price more volatile than other mid-tier stocks.

As long as I can remain focused on the long term, however, this looks like a good investment for me.

Redrow

As a (mostly) growth-focused investor, I’ve long regarded housebuilders as more suitable for a wholly income-focused portfolio. Perhaps I’ve been overly cautious. After all, some companies in this sector look temptingly priced for the growth they offer.

One example from the FTSE 250 is Redrow (LSE: RDW). We’ve seen a post-lockdown housing boom, but its shares now trade on less than 10 times earnings. More importantly, a forward PEG ratio of 0.5 is also very low. 

Of course, a key question now is whether recent activity will now decline as more people return to the office, others get laid off, and government incentives end. In fact, there are signs this is already happening. 

Still, I’m encouraged by RDW’s most recent update. Back in July, it reflected on having a “very strong” order book. Its sales market also “remains robust“. This leads me to suspect that buying for my ISA now could still work out well. 

Coats

A final ISA buy is industrial threads and fasteners manufacturer Coats (LSE: COA). A world leader at what it does, the business also has great earnings diversification, supplying products to industries such as apparel, transportation and telecoms.

Once again however, it’s the valuation that appeals. Coats’ forward PEG is bang on 1 at the moment. So, while not being as undervalued as the other two stocks mentioned, it feels like I’d be getting a good price based on this penny stock’s prospects.

Naturally, there are still risks here. A growing awareness of just how unfriendly fast fashion is for the environment could impact clothing sales and, by association, profits at Coats. Debt has also been creeping up over the years and could be worth watching.

On balance though, I’d still buy today. 

The post FTSE 250: 3 dirt-cheap growth shares I’d buy for my ISA appeared first on The Twelfth Magpie.

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Paul Summers has no position in any of the shares mentioned. The Motley Fool UK has recommended Coats Group and Redrow. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

As such, FTSE 250 shares such as Saga (LSE: SAGA) could offer income investing appeal. The company has a dividend yield of around 8% at the present time, with there being scope for its dividend payout to rise over the medium term. Alongside another dividend growth stock which released an update on Tuesday, it could be worth buying in my opinion.

Improving outlook

The stock in question is industrial thread manufacturer Coats (LSE: COA). Its trading update showed that group sales for the July to October period increased by 3% on a constant currency basis. Its Industrial division saw improving momentum, with sales rising by 9%. This was underpinned by higher growth rates in both the Apparel and Footwear segments, as well as the Performance Materials business.

The company’s performance was relatively strong in spite of mixed demand from retailers, with strong momentum in Asia helping to offset this. A focus on product innovation and digital solutions could help it to continue outperforming the wider market.

With Coats due to report a rise in earnings of 16% in the current year, followed by further growth of 8% next year, its dividend could rise at a rapid rate. Although it only yields 1.7% at the present time, dividends are covered 4.5 times by profit and are expected to grow by 10% next year. As such, the stock could become increasingly appealing from an income perspective.

High yield

Of course, Saga’s 8% dividend yield is one of the highest in the FTSE 250 at the present time. The stock has endured a challenging year, with difficult operating conditions causing its financial outlook to deteriorate. In the current year, for example, it is expected to report a fall in earnings of 5%, followed by disappointing growth of 2% next year. This could mean that dividend growth is somewhat lacking over the medium term.

One reason for its slowing profit growth outlook is increased competition. The company is finding it harder, and more expensive, to win new business in what is a challenging wider market. And with there being the potential for weakening consumer confidence as the Brexit process moves ahead, its financial prospects may remain relatively downbeat.

Despite this, Saga could offer impressive total returns in the long run. The company has a price-to-earnings (P/E) ratio of 8.5. This rating factors in its forecast decline in earnings in the current year, and could suggest that it offers a wide margin of safety. And with a high yield to provide an impressive total return on its own in the meantime, the stock may be able to generate significantly higher returns than a savings account.

The post Forget 1.5% from a savings account. I’d rather have FTSE 250-member Saga’s 8% dividend yield appeared first on The Twelfth Magpie.

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Peter Stephens owns shares of Saga. The Motley Fool UK has recommended Coats Group. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

The construction giant saw profits jump by 26% and 10% in 2016 and 2017 respectively. And while City analysts are expecting bottom line rises to moderate in the medium term with increases of 6% forecast for this year and the next one, I reckon Costain is a great bet for those seeking sustained growth long into the future.

Indeed, the Maidenhead company’s update last month assured me of its bright profits prospects. In 2017, revenues rose 4% during 2017 to £7.3bn and Costain said that its order book remained stable at £3.9bn as of December, with £1.1bn worth of sales secured for the current year.

The small-cap’s focus on essential services like water, energy and transport means that the company can bank on reliable income growth. And as I noted last time out, rising investment in these areas is giving its revenues momentum an added injection of sauce.

An added bonus

What’s more, Costain’s bright profits outlook feeds into predictions that its dividends should keep growing at a mighty rate.

Last year’s payout increased 10% year-on-year to 14p per share, and this is expected to rise to 15.8p in the current year and to 17.9p in the following period. As a consequence, yields sit at a significant 3.4% and 3.7% for this year and next respectively.

At current prices, Costain can also be picked up on a forward P/E ratio of 12.4 times. This is far too cheap given the firm’s solid outlook, in my opinion.

Another growth great

Another hot growth stock that you need to check out today is Coats Group (LSE: COA).

The FTSE 250 firm has seen earnings swell by almost 80% over the past three years and the Square Mile’s number crunchers are expecting this scintillating progress to continue. A 10% earnings improvement is estimated for 2018, and another 9% rise for next year.

Coats — which manufactures threads and zips for the clothing industry, amog others — may not be as cheap as Costain, although a forward P/E ratio of 15.5 times is hardly extortionate given its equally impressive earnings picture.

Thanks to market share grabs, the company’s solid revenues momentum has continued, and full-year sales rose 4% in 2017 to $1.5bn. And the firm last month launched its two-year ‘Connecting for Growth’ transformation programme that looks set to keep business flowing in by setting itself up to cope with its fast-changing markets more effectively. The strategy is designed to “[add] value to our customers by being agile partners with an increased emphasis on speed, quality, value, innovation and corporate responsibility,” it said. And it should also create annualised operating cost savings of $15m by 2020.

The post 2 super growth stocks that are perfect for retirement appeared first on The Twelfth Magpie.

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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Senior service

Engineering solutions provider Senior (LSE: SNR) designs, manufactures and markets high technology components and systems for the worldwide aerospace, defence, land vehicle and energy markets.

The company’s shares have fallen over the last 2.5 years on the back of declining profitability in its Flexonics division, as the land vehicle and industrial markets have remained subdued. However, it appears that sentiment towards the stock is improving, with the share price rising from around 170p back in November to over 250p today. Is there further to run?

This morning’s half-year results comprise a mixed bag of numbers. For example, on the positive side, revenue rose 13% to £510m, free cash flow rose a healthy 71% to £29.6m, and net debt was reduced by £26m to £181.6m. The interim dividend was also lifted 5% to 2.05p per share.

On the negative side, profit before tax and adjusted earnings per share fell 26% and 23%, respectively.

However, chief executive David Squires did sound confident about the future: “Looking further ahead we remain positive about future prospects with strong and visible growth in Aerospace and the anticipated recovery in Flexonics.”

The market appears to like the results and guidance, with the share price up around 4% today. And on a FY2018 P/E ratio of 16.5 and trailing yield of 2.6% the stock appears to offer reasonable value right now. As a result, I believe shares in Senior may be worth a closer look.

Get your Coats

Another stock exhibiting strong momentum right now is industrial thread manufacturing specialist Coats Group (LSE: COA), the 250-year old company supplying thread to customers including Adidas, Burberry and NEXT.

Coats shares have surged over the last 12 months, rising 160% from 30p to 78p, and the stock has recently re-entered the FTSE 250 index. The group released half-year results this morning and the numbers look healthy.

Revenue rose 5% on a constant exchange rate basis to $740m, and adjusted earnings per share rose a significant 38% to 3.06 cents. The group generated strong adjusted free cash flow of $109m, up from $84m, and the board raised the interim dividend by 7% to 0.44 cents. Chief executive Rajiv Sharma said: “We will look to build on the strong first half of the year, and expect to deliver performance in line with management’s expectations for the full year.”  

Analysts expect Coats to generate earnings of 6.1 cents this year, up from 4.9 cents last year. At the current share price, that equates to a forward looking P/E ratio of 16.7. The company is also expected to boost its dividend considerably in coming years.

With that in mind, and given the fact the stock is now in the FTSE 250 index, I wouldn’t be surprised to see Coats shares continue rising, despite the impressive gain recorded over the last year.

The post Could these momentum stocks make you a fortune after today’s news? appeared first on The Twelfth Magpie.

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Edward Sheldon has no position in any shares mentioned. The Motley Fool UK has recommended Burberry. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Improving performance

Reporting on Tuesday was international designer, manufacturer and distributor of innovative flooring, Victoria (LSE: VCP). Its underlying profit before tax is ahead of expectations for the financial year to 1 April 2017. As a result, its share price moved over 4% higher on the day of the results.

Its performance has been stronger than expected due to operational synergies. This follows recent acquisitions in the UK and Australia, which have positively impacted gross profit margins and overheads during the current year. It expects more improvements in these areas in the coming financial year, with a new CEO set to implement a refreshed strategy.

With more acquisitions on the horizon and operational improvements anticipated, Victoria is expected to record a rise in its bottom line of 26% in the current year. Despite this rising bottom line, its shares continue to trade on a relatively low valuation. For example, they have a price-to-earnings growth (PEG) ratio of only 0.6, which indicates that now could be the perfect time to buy them.

Certainly, the outlook for the global economy is challenging. But with a wide margin of safety and sound fundamentals, Victoria seems to be a cheap stock which shouldn’t be ignored.

Strong recovery play

While industrial thread manufacturer Coats (LSE: COA) is expected to experience a rather challenging year, its long-term prospects remain bright. In the current financial year, the company’s earnings are due to fall by 29%, which could hurt investor sentiment. That’s especially the case since the company’s share price has more than doubled in the last year, which indicates that a degree of profit taking could be expected in the coming months.

Looking ahead to next year, Coats is forecast to return to positive growth. Its earnings are expected to rise by 10%, which indicates that its share price performance could improve. And since its shares trade on a PEG ratio of 1.1, it seems to offer a sufficiently wide margin of safety to merit investment at the present time.

With a dividend yield of 2%, Coats may not be an attractive income share right now. However, since shareholder payouts are covered four times by profit, there is scope for a rapid rise in dividends over the medium term. This could start as soon as next year, when the company is expected to record a dividend payout which is 17% higher than in the current year. Therefore, it may prove to be a strong income, value and growth play in 2018 and beyond.

The post 2 dirt-cheap stocks you can’t afford to ignore appeared first on The Twelfth Magpie.

More reading

• With a yield of 6.8% and a P/E ratio of 12.1, is this a dirt cheap FTSE 250 stock to consider?
• Will SpaceX, Nvidia, or Alphabet be the first $10trn stock?
• Up 95%! This FTSE 100 stock’s outperformed Nvidia over the past year
• With a 9.3% yield, is this an amazing opportunity to consider buying dirt-cheap Taylor Wimpey shares?
• How much do you need in a Stocks and Shares ISA to aim for £375 a week in retirement?

Peter Stephens has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.