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The FTSE 250 is up 5.1% year to date and 7% over the past 12 months. So it may be crawling back to some sort of form after a difficult few years.
Here, I’ll look at a mid-cap stock that I reckon has the potential to outperform the FTSE 250 in future. As such, I think it’s worth investigating as a potential portfolio addition for investors.
Animal genetics specialist
Genus (LSE: GNS) is up 30% in 2025, so has already started a comeback. Yet shares of the animal genetics firm remain 66% lower than in September 2021.
The company helps farmers breed pigs and cows with superior genetic traits. These animals then grow faster, stay healthier, and produce more meat or milk.
Genus operates through two main divisions: one focused on pig genetics (PIC), and the other improving cattle herds (ABS).
Much of the firm’s troubles in recent years can be traced to China, which was once a promising growth market for PIC. However, the Chinese pork market has been volatile, with weak pig prices causing persistent underperformance.
In its interim results for the six months to 31 December, Genus said it had enjoyed a “more stable trading environment” in China. It notched up seven new royalty customer wins there, bringing the total to 20 signed over the preceding 18 months. There was also strong growth in the Americas and wider Asia region.
Consequently, pre-tax profit came in above expectations at £35.4m, a 21% increase (or 38% increase in constant currency). Adjusted earnings per share jumped 20%.
Gene-edited pigs
The most important catalyst for long-term growth comes from a recent US regulatory approval for its gene-edited pig programme. These pigs are resistant to PRRS (Porcine Reproductive and Respiratory Syndrome), a nasty viral disease that puts significant financial strain on pig farmers worldwide.
For Genus, this opens up a major new commercial opportunity. It could license this PRRS-resistant trait worldwide, improving the global pork industry while generating a lucrative new revenue stream.
However, to fully unlock the growth potential, regulatory approval will be needed in China. This is the world’s largest pork consumer and producer by far, so commercialising gene-edited pigs there would be a major breakthrough.
Genus is working with Chinese authorities to get approval, but the regulatory process is understandably cautious when it relates to the food chain. If China doesn’t give the nod, that would be a big blow.
Another potential risk would be an escalation in the global trade war. Ideally, US pork producers need frictionless trade between America and key export markets like Mexico, Canada and Japan. So high reciprocal tariffs would be a major challenge.
Still, this gene-edited pig programme could be a huge growth opportunity, starting in 2026/27. Genus has already secured approval in Brazil, Colombia, and the Dominican Republic, and the key US approval should fast-track more green lights worldwide.
Valuation
Based on current forecasts for its fiscal 2026 year, which starts in July, the stock is trading on a forward price-to-earnings (P/E) ratio of 22.8.
This is a premium to the FTSE 250, but I think it may turn out to be cheap, assuming the gene-edited pig programme is successfully commercialised worldwide.
Longer term, Genus is well-positioned for growth thanks to the rising demand for animal protein, driven by global population growth.
This story originally appeared on Motley Fool
