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The FTSE 250‘s an excellent place to hunt for top growth stocks. Some superstars of the London stock market like Games Workshop and Rolls-Royce today sit proudly in the FTSE 100 after experiencing electrifying share price growth.
In fact, these UK shares have more than doubled in value in a short space of time. Games Workshop has in fact trebled in just four years, making me as a shareholder a large pot of cash in the process.
I’m looking for the next FTSE 250 ‘multibaggers’ to buy. And I think I may have found them. Let me explain why they demand a close look.
Leaping higher
Chemring (LSE:CHG) shares have rocketed 107% in value since Russia invaded Ukraine in early 2022. It’s an event that transformed the earnings outlook for the entire defence industry. Global arms spending is rising at the fastest pace since the Cold War, hitting record highs approaching $3trn last year.
Chemring — best known for making explosives and decoys used on planes and ships — is witnessing unprecedented demand against this landscape. Sales leapt 7% in the six months to April, and Chemring ended the first half with a £1.4bn record order book (up 8%).
No wonder the company’s raising production capacity to meet future demand. This includes expansion to its Nobel factory in Norway, which will push explosives output 275% higher compared to 2023 levels.
As a general rule, a stock that’s growing earnings by 7%-8% a year stands a good chance of doubling its share price in a decade. For the next few years at least, things are generally looking good on this front for Chemring, boosted by those capacity improvements.
Analysts are tipping:
- A 5% earnings fall in 2026.
- A 26% rebound next year.
- An 18% earnings increase in 2028.
Chemring faces a few challenges that could endanger these estimates. Supply chain issues remain a problem across the defence industry. Sales are also highly sensitive to the broader geopolitical landscape. But on balance, I think this FTSE 250 company should keep outperforming.
A FTSE 250 tech star
Softcat‘s (LSE:SCT) one of your classic high-growth tech shares. It’s doubled in value in just six-and-a-half years, reflecting rapid growth in areas like cloud computing, cybersecurity, digital workspaces and artificial intelligence (AI).
Weak growth and rampant inflation make things tough for UK business today. And this remains a significant threat for the entire technology sector. But Softcat continues to thrive, with sales and operating profit up 54% and 16% respectively in the first half.
The IT star’s benefitting from a steady rise in market share. And that’s not all — as companies steadily digitalise their operations to improve efficiency and cut costs, sales are booming even during these challenging times.
City analysts expect these themes to continue. As a result, Softcat’s expected to record:
- A 16% earnings rise in 2026.
- A 2% increase next year.
- A 20% earnings jump in 2028.
I think it’s one of the FTSE 250’s hottest growth shares, which is why I’ve added it to my own portfolio. But it’s not the only top growth stock we’re keeping an eye on today…
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Royston Wild owns shares in Games Workshop and Softcat.
This story originally appeared on Motley Fool
