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I want to add growth My self-investment personal pension (SIPP) stock. This shows a change in strategy for me.
In recent years, I have focused on value share, particularly income salaries. FTSE 100 Financials like Legal & General Group. But I need a break because I am paradoxical. Today I want to be perfectly fit for momentum. I choose a red-hot growth share and hope it gets even higher with luck.
Of course, both strategies have risks. A valuable stock could turn out to be a trap, but a high-flight growth share could crash. After stock has already spiked, I am particularly wary of buying, but this is exactly where it is FTSE 250 A company that lost 20% last week.
But this is not a flash of bread. Its stock has grown by more than 50% in 12 months and has grown by more than 115% in five years.
Defence demand is rising rapidly
The stock in question is Chemical Group (LSE: CHG), and now there is the advantage of operating in a sector that is in high demand: defense.
Chemistry is the world leader in systems that detect chemical and biological threats, electronic warfare, and find improvised explosive devices. In today’s uncertain world, the kit is in demand.
That’s not the only thing that’s riding on this trend. FTSE 100 Pier Babcock International It jumped 13% last week. BAE System and Rolls-Royce I’ve been surprised recently as well. Luckily I have both.
Kemling scored a major lift on Friday (June 6th). Belenberg analysts upgrade stocks from hold to buy; “Very bright” Outlook until 2030. It pointed to a pipeline of opportunities for Chemring’s energy sector.
Big order form
Berenberg said earnings per share are projected to increase on average at 19% per year over the next three years. Brokers were called Chemring’s Price/Revenue and Growth (PEG) Ratio “praise”and hiked its price target from 470p to 670p.
This came hot when Chemring reviewed its annual guidance shortly after the first half of the update on Tuesday, after reporting a 12% increase in base profit to £39.8 million. The order book reached a record £1.3 billion, with intake rising 42% to £488 million.
Management pointed to growing global tensions from Ukraine and the Middle East to Asia-Pacific, noting that many governments are rushing to increase their defense budgets and replenish their depleted stockpiles.
Timing is important
This all describes recent rally, but even strong stocks can be too fast and too fast. The stock has five analyst forecasts, all with a 12-month target of 540p. This is almost 7% below the price of today’s 584p. However, all six analysts value the stock is currently labelled as a strong purchase. No one says hold, no one says sell.
After QuickFire Surge, chemists will wait and watch before diving in as they may return slightly as benefit participants appear. Personally, I’ve already had enough exposure to defenses through Bae and Rolls-Royce.
If I have not yet been so deeply exposed to this dynamite sector, I am considering seriously considering purchasing chemistry in the next few days. If I get a little fever, I still have a chance.