Over the past year, many stocks have rallied. However, stock market buoyancy has taken a hit in the past few months. While many stocks have still maintained some gains, only a few have managed to almost double their share price from last year. This FTSE 250 stock is one of them.
Media company Future (LSE: FUTR) has seen a 97% increase in its share price over the past year. And if that’s not impressive enough, over the last three years, it has seen a huge 540% increase in its share price. This is an extremely promising place for me to start figuring out whether it would make a good buy for me even now.
Strong results for Future
Its latest financial results would certainly suggest so. The publisher of brands like The Week and MoneyWeek reported a fine set of numbers last week for its financial year ended 30 September 2021. Its revenues grew by a significant 79% compared to the year before, its pre-tax profits were up 107% and cash generated from operations increased by 117%.
These latest figures only add to its consistent growth over the years. It also expects this growth to continue in the next year. In its outlook, the Future Group says that growth could accelerate in the second half of financial year 2022. It has also upgraded its expectations and now believes its adjusted numbers for next year will be “materially above current expectations”.
Analysts optimistic about the FTSE 250 stock
It is little wonder then, that analysts’ estimates compiled by the Financial Times expect its share price to rise by around 33% in the next 12 months. The more optimistic ones expected that it could rise by another 56%. However, not everyone is equally bullish. There are some analysts who expect a price fall by 37% as well.
What could go wrong
Immediately, I can see at least one reason why this is the case. In relative terms, the stock is super-expensive. At 56 times, its price-to-earnings (P/E) ratio is far higher than that for many other FTSE 250 stocks. Of course there is a reason for this: it has done quite well, even at a time when many other companies have languished. So clearly, investors are willing to pay a premium for it. Additionally, its outlook continues to make the stock look promising.
However, I think that if we finally put the pandemic behind us in the near future, it might look less attractive as an investment candidate for my portfolio. Stocks that are still struggling today might be more attractive — and affordable — investment options at that point.
My takeaway
On the whole though, I like the stock for its long-term potential. If I am willing to hold it for the next five years, for instance, there is a good chance that it will be a rewarding one to buy. Keeping this in mind, it is on my list of stocks to buy in 2022. It might not double my money next year, but I am hopeful it will do so over time.
Manika Premsingh 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.
