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Various FTSE 250 shares have performed well in the past year. But there are only 10 to have risen by over 50% during the period. In terms of being red hot, there are even fewer that have really caught my eye. Ones that could turn a £1k investment into significantly more. So here’s my pick for investors to consider.
Details of the contender
I’m talking about Plus500 (LSE:PLUS). Operating in over 60 countries, the fintech firm provides online trading platforms for retail investors. Over the past year, the growth stock‘s risen 59%.
Plus500’s business model revolves around offering trading services, allowing customers to speculate on the price movements of various financial instruments, ranging from stocks to commodities. It makes money from commissions and transaction fees associated with the trading. Put another way, the more clients trade, the more money Plus500 makes.
The latest trading update from the end of April showed a 13% jump in Q1 revenue, with EBITDA up 23% versus the same period last year. One of the largest areas of growth came from US stock market futures contracts. This doesn’t surprise me, as this is one of the main ways that international investors can speculate on the US market. Given the volatility since President Trump’s inauguration in January, trading in this area has skyrocketed.
More volatility ahead
The share price could continue to outperform, given the volatility still ahead in the second half of the year. This is relevant for US stocks, with tariff chatter and trade uncertainty still high.
The business also recently announced the conditional acquisition of Mehta Equities in India. This inorganic growth through acquisitions allows Plus500 to tap into different geographies. I think a continued mix of this type of strategy and growth from existing clients should enable profits to keep increasing into next year.
One risk is that the firm makes a large amount from a concentrated pool of very active clients. This could mean a large negative hit if some key clients turn to competitors.
£1k potential
Q1 earnings were $93.8m. If I assume this is repeated for the coming quarters, this would equate to a profit for the year of $375.2m. For 2024, this figure was $342.3m. So the potential increase is just under 10%. Given the price-to-earnings ratio’s 13.15, I don’t see it as overvalued. Therefore, I’d expect the share price to rally around 10% in the coming year if trading updates show that the performance in Q1 is being repeated.
Given the volatility I expect, this 10% is more of a baseline. If we repeat the April whipsaw price movements, this 10% gain could double to 20% as earnings spike for Plus500.
On that basis, I think £1k could grow to £1.1k or £1.2k. Granted, this isn’t the same kind of return as noted from the past year, but it’s still very respectable and therefore worthy of consideration.
