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Finding a FTSE 250 share in the bargain bin can be difficult. The UK Mid Cap Index has risen 15.9% to 21,114 points in the last 12 months and more than 170 companies in the index have made gains.
That said, there is one part of the economy that I have had my eye on. The maritime industry has been in the news lately amid rising geopolitical tensions and higher supply chain costs.
Once I saw a FTSE 250 stock beaten in that industry, I had to dig in: the good, the bad and the ugly.
industry that I like
clarkson (LSE: CKN) is an integrated maritime power. The company offers integrated services covering shipbroking, research, finance, digital tools, port services and green advisory services.
I have had my eye on maritime services for a long time. There is potential for growth with increasing global trade and a continued reliance on shipping for much of it.
The operating environment has stabilized and transportation costs have fallen. Additionally, the company is moving into emerging areas, including offshore wind, as well as base and battery metals.
Solid finances
One thing that caught my eye was Clarkson's interim results for 2024. Revenue and underlying profit before tax came under pressure in the six months to June, with the latter falling 3% to £109.2m. That's not bad considering 2023 had a pretty excellent year.
Underlying earnings per share of 129.1p, along with £178.4m in cash and liquidity, prompted the board to declare an interim dividend of 32p per share. That's a 7% increase on last year and an incredible 22nd consecutive year of dividend increases for FTSE 250 shares.
With unchanged full-year guidance and a strong balance sheet, I thought I'd take a look at Clarkson's valuation.
Valuation
The FTSE stock has a price-to-earnings (P/E) ratio of 13.5 at the moment. This seems a little cheap to me, especially given historically strong dividend growth.
Add to that a 2.9% dividend yield for the income investors among us, and there are a few things to like.
the capture
There is nothing free in investing and Clarkson is no exception.
One thing that stood out is a price-to-book (P/B) ratio of 2.4 which is always worth noting. However, as you are a service provider, I may overlook this based on the nature of your balance sheet and service offering.
The FTSE 250 shares are up almost 30% in the last 12 months and sit at 3,685p despite a recent swing. This was largely because investors were not overly impressed with the half-year results.
I think a big part of that may have been the excellent 2023 period that the year-on-year numbers were evaluated against. A cyclical business like Clarkson is not without risk, but the progressive dividend policy and future prospects have me kicking the tires a little more.
the verdict
Investing in FTSE 250 shares like Clarkson is not without its challenges. Looking short-term, I see some potential and long-term diversification opportunities.
While I don't have cash on hand at the moment, I will look to invest before the end of the year if I can. Any further drop in the share price towards the 3,000p mark would put it even more firmly in the buy zone for me.
