Should I buy this FTSE 250 stock that’s getting promoted to the main index?

The FTSE quarterly reshuffle has been selected, with Burberry and Metlen Power & Metals (LSE:MTLN) getting the call-up from the FTSE 250 to affix the FTSE 100 later this month. Burberry is a widely known inventory that some buyers will select to deal with. Nonetheless, Metlen is much less acquainted to some, which is why I wished to discover it and decide if it’s value contemplating.

The brand new child on the block

You possibly can be forgiven for not being that educated in relation to Metlen. It solely moved its major itemizing from Athens to London in August. But, within the course of, it recruited sufficient market curiosity to ship a market cap of €7bn. That is effectively above the brink wanted for FTSE 100 inclusion. This reshuffle was one of the best alternative to make this occur. It additionally modified its identify from Mytilineos to Metlen as a part of the transfer.

When the transfer occurs, it’ll mark a milestone, being the primary Greek multinational to interrupt into the FTSE 100. Being added to the principle index triggers necessary shopping for by index funds and ETFs monitoring the benchmark. This might see the share worth rally additional, even after accounting for FTSE 250 index funds promoting the inventory to rebalance.

But, earlier than I get too far forward of myself, let’s run by way of whether or not the enterprise is doing effectively at a basic stage.

Speaking by way of fundamentals

Metlen is a heavyweight Greek industrial and vitality conglomerate. It’s Greece’s largest non-public vitality operator. This contains creating and working thermal, photo voltaic, and wind vegetation to managing grid infrastructure. On the identical time, it runs Europe’s solely absolutely vertically built-in bauxite mine. That is the commonest ore of aluminium.

Evidently, these distinctive promoting factors have made the corporate very worthwhile through the years. There isn’t a lot buying and selling historical past on the London Inventory Change, however the Athens itemizing exhibits the inventory has jumped by 54% over the previous 12 months.

Given the character of operations, I really feel it’ll have fixed demand going ahead. It combines each renewable vitality parts with regular grid infrastructure. I consider this helps to future-proof the enterprise, no matter the way it pans out with regard to vitality consumption.

The flipside

Metlen is a brand new enterprise to me. I hadn’t heard of it till very lately. Though it has fame, I attempt to observe Warren Buffett’s recommendation to solely spend money on what I do know and am comfy with.

For instance, it has moved to the UK itemizing for larger visibility, which I perceive. On the identical time, I’d wish to see it mattress right here in first earlier than making a choice. It’s additionally closely uncovered to commodity costs. After all, this is identical with UK-listed vitality firms. However does it make sense for me to take the volatility threat that these shares have, in addition to coping with an organization working outdoors of the UK? I’m undecided.

The information over the following few weeks will definitely collect plenty of media consideration. However I’m going to sit down on my arms proper now to see how the market digests issues earlier than making any choices.