Up 75% in 5 years, I reckon this FTSE 250 still has lots to give!

One FTSE 250 stock I reckon looks like an exciting opportunity is Spire Healthcare (LSE: SPI).

Here’s why I’d be willing to buy some shares when I next have some investable cash.

Private healthcare

Spire is a private healthcare firm with 40 private hospitals and eight clinics. The business caters to those individuals with private medical insurance, as well as others willing to pay as a one-off to have private medical care. Interestingly, it also helps the NHS with some services as the ailing state-backed provider continues to struggle with backlogs.

Spire shares have been rising in recent years. Over a 12-month period they’re up 11% from 215p at this time last year, to current levels of 239p. Going back even further, an impressive rise of 75% from 136p to current levels is hard to ignore.

My investment case

The current state of the NHS is where my belief that further growth is on the cards. Waiting lists are only rising, and many are turning to the private sector for help — those who can, at least.

Furthermore, with resources stretched, the NHS is already turning to providers like Spire to lend a hand. As the population is growing, and ageing, this reliance could also grow. Both aspects could help boost Spire’s performance and returns.

There are two issues that worry me for Spire. One is that of the debt levels on its balance sheet. They’re probably a bit higher than I’d like, and this is a worry. Sometimes paying down debt can take precedence over returns, and can hurt investor sentiment too.

The other issue I have is an overhaul of the NHS could mean the government could end outsourcing operations to private firms. At present, Spire’s NHS revenues are growing nicely and contributing to the firm’s growth. If this were to end, performance and returns could be dented.

Back to the bull case then, I can’t see the NHS radically changing overnight. Such an endeavour can take years, if not decades, especially with the current economic climate as it is. Spire’s recent results have only shown performance growth, and I’m confident this trend will continue.

Next, Spire shares offer a small dividend yield of just under 1%. I can see this level of return growing if performance continues on an upward trajectory. Although, I do understand that dividends are never guaranteed.

Finally, based on analyst forecasts, the shares look cheap on a forward price-to-earnings growth ratio of 0.8. Any reading below one can indicate a share is undervalued. However, I do understand forecasts don’t always come to fruition.

Final thoughts

I only see the NHS’ reliance on private firms, and people looking to go private for medical treatment, spiking in the years to come. This could benefit Spire, if you ask me.

Overall, solid growth prospects, an enticing valuation, and potentially growing returns help my investment case.