Key points
- Both of these FTSE 250 businesses demonstrate strong and consistent growth in revenue and profits
- Tate & Lyle will pay a special dividend after the imminent sale of its Americas primary products business
- Plus500 is launching a $55m share buyback scheme
The FTSE 250 is an index full of exciting companies with strong growth prospects. I think I’ve found two firms that could perform as part of a portfolio geared up for the long term. While Tate & Lyle (LSE: TATE) has a record of results indicating constant growth, PLUS500 (LSE: PLUS) has just confirmed a share buyback scheme. Why should I add these two businesses to my portfolio? Let’s take a closer look.
A food and beverage heavyweight
Tate & Lyle, a supplier of ingredients to the food and beverage industry, has delivered growth over the past five fiscal years. Revenue has grown — albeit only slightly — from £2.7bn to £2.8bn, and while this is far from heart-stopping, it is remarkably consistent.
What’s more, the firm is dependable regarding profitability too. Over the same period, profits before tax rose from £233m to £283m. Again, this is very consistent. Earnings per share (EPS) have also grown, boasting a compounding annual growth rate of 2.6%. These steady gains are exactly what I’m looking for in my long-term portfolio.
In a recent trading update for the three months to 31 December 2021, Tate & Lyle confirmed it was trading in line with expectations, but that the discontinued bulk sweetener and industrial starch segments were “significantly weaker”. In spite of this, revenue from continuing operations was up 18% compared to the same period of the previous year.
Furthermore, the firm will pay a special dividend of £500m after the imminent sale of stakes in its primary products business in the Americas. This is due in March 2022.
A FTSE 250 trading platform
Plus500 is a trading platform that enables customers to trade contracts-for-difference (CFDs) on over 2,500 financial instruments. Company revenue increased over 64% to $718m between calendar years 2017 and 2021. During this period, profits have also grown over 50%.
In the firm’s preliminary results, for the year to the 31 December 2021, active customers fell 6%. Furthermore, revenue was down 18% year-on-year. This is actually indicative of the unprecedented growth the company enjoyed during the pandemic and on a two-year basis, revenue was still up 103%.
Furthermore, PLUS500 announced a new share buyback scheme of $55m. In essence, this means the business is repurchasing some of its stock. This is a way for the company to return cash to shareholders. I view this development with some optimism, because it suggests the firm is in a strong financial position.
Both of these companies display strong growth in their results and could be great additions to my portfolio. With a view to holding for the long term, I am encouraged by the special dividend and share buyback schemes. I will be buying shares in both firms without delay.
Andrew Woods 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.
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