1 under the radar FTSE 250 gem yielding over 6% investors should consider buying
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One FTSE 250 stock that caught my eye recently TP ICAP Group (LSE: TCAP).
This is why I believe investors should consider picking up some stocks.
Various businesses
TP ICAP is a marketing, data, and analytics business serving some of the world's largest industries. This includes financial services, energy, and property.
I can see that the shares have been doing very well in the last 12 months. They are up 43% from 166p this time last year, to current levels of 238p.
The investment case is classified
Starting with the bull case, on top of things, the fundamentals of TP ICAP look good. For example, the stock looks decently priced right now at a price-to-earnings ratio of eight. And, based on forecasts, a forward P/E ratio of 10 still reflects forward value as well. However, I understand that predictions do not always come true.
In addition to this, the dividend yield of 6.2% is attractive. However, I know that benefits are not guaranteed. On top of this, the business confirmed a £30m share buyback earlier this month, which is good. It is the third of its kind in the last 12 months.
Looking ahead, analysts expect earnings to increase by close to 70% next year. I'll take these predictions with a grain of salt, of course. Still, it shows confidence at least.
Instead, I would like to focus on the recent results of TP. The half-year report released earlier this month made for a good read, in my opinion. Some of the key takeaways are that group revenue and EBITDA increased by 3% and 7%. Also, pretax income and earnings per share rose 10% and 8%.
Finally, I am inspired by TP's data analytics business arm, Parameta Solutions. I think this is where the stock can see growth in earnings and returns. The business is even considering a separate US listing, but I will be watching developments closely. As the world continues through the digital revolution, there may be exciting times ahead.
Risk and my decision
From a bearish perspective, it is important to note that the company's retail business may become obsolete in the future. This is due to changes in technology, and the fact that people may be moving away from doing business over the phone to opt for smarter ways of working. This may impact investor sentiment and returns. However, for now, the business continues to generate decent revenue from this side of the business.
Next, from an income perspective, it's hard to ignore the company's track record and balance sheet. It has a history of payments, and current credit levels are something I will look at. These debts can hinder returns, and growth plans.
Overall, there is a lot to like about the business, in my opinion, including a decent valuation, and the potential for startup income. The ace up its sleeve is the data side of the business, which can have great potential to move forward, and develop the business to a new level.
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