the FTSE Russell publishes quarterly report outlining the upcoming FTSE index shuffle. In his June report, he gives advice Auction Technology Group (LSE: ATG), Moon Pig Group, Renishaw, Trustpilot Group, Tyman and Volition Group (LSE: FAN) as potential additions to the FTSE 250 index. He also slates Royal courier as the likely candidate to replace Renishaw in the FTSE 100.
The Auction Technology Group is the world’s leading provider of organized auction marketplaces. More than 2,000 auction houses use its technology and £ 6 billion of items are sold each year. It was launched on London Stock Exchange via an initial public offering (IPO) in February and its share price has skyrocketed.
ATG supports existing auction houses by providing software, design and e-commerce solutions. It also operates the well-known auction sites i-bidder.com and BidSpotter. In addition, it has an antique magazine and several additional markets. I think the digital art craze for non-fungible tokens (NFTs) is renewing interest in auctions. In addition, the home economy has boosted income. In fact, the group’s revenue rose 48% to £ 34.5million in the six-month period to the end of March.
The ATG share price is up 45% since the IPO. The company has a market cap of £ 1.1bn and as mentioned is now in the running to join the FTSE 250. There is a risk that the reopening will reduce interest, but with a clear shift towards trading. electronics, I feel optimistic about the sector. I would gladly buy ATG shares today.
Another competitor to the FTSE 250 is the online review site, Trustpilot Group, founded in Denmark in 2007 and launched via an IPO in March.
The Trustpilot share price has risen 20% since the IPO and now has a market capitalization of £ 1.3 billion.
It invests in its technology and big data ecosystem to improve ease of use for users and customers. The site’s mission is to be open and collaborative, and it’s popular with consumers for providing unbiased website reviews. It removed 2.2 million fake reviews last year). The business earns money through paid products and services. The hook for businesses is that they get an element of marketing and increased credibility for the business.
Staying on top of fake reviews and ensuring a high level of trust is key to its continued success. Nonetheless, I think this sounds like a great company and would consider buying Trustpilot shares whether or not a member of the FTSE 250.
The ventilation specialist Volution Group operates internationally. It sells its extractor fans and installations to individuals and businesses. The United Kingdom represents half of its activity, with Europe and Australia constituting the rest.
Following the M&A roadmap at scale is a clear priority for Volution. For now, he sees plenty of opportunities in the UK and mainland Europe, but doesn’t rule out considering North American prospects in the future.
So far, it has funded its transactions from its own generation of cash. But he noted that he could move on to issuing shares for future acquisitions. This could lead to a dilution in the stock price, so I imagine the market reaction would depend on the quality and size of the acquisition.
Another issue that could lead to stock price volatility for the group is the pressure on commodity prices. Nonetheless, I like the outlook for this business. After the pandemic, the demand for ventilation appears to be increasing. These are the same new territories that climate change is raising temperatures. I would consider adding Volution Group stocks to my Stock & Stock ISA.
The post 3 stocks were leaning towards the FTSE 250. Would I buy? first appeared on The Motley Fool UK.
Kirsteen has no position in any of the stocks mentioned. The Motley Fool UK has no position in any of the stocks mentioned. The opinions expressed on the companies mentioned in this article are those of the author 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 wide range of ideas makes we are better investors.
Motley Fool United Kingdom 2021