Is this the best FTSE 250 growth stock to buy before 2024?

Elevated geopolitical tensions and outbreaks of conflict in different corners of the globe can be challenging for investors to navigate. But, not all stocks are affected equally by these conditions. As such, I’ve been searching through the ranks of FTSE 250 shares for companies in the defence industry that have seen demand for their products soar recently.

One firm that could continue to outperform in this environment is Chemring Group (LSE:CHG). The advanced technology manufacturer has an expansive product portfolio. Its offering include sensors to detect explosive, biological, chemical, and cyber threats. The group also makes expendable countermeasures for protecting air and sea platforms against guided missiles.

Considering the Chemring share price has more than doubled in five years, can the FTSE 250 stock continue to deliver stellar returns for investors in 2024? Here’s my take.

Strong growth prospects

The company’s FY23 results released today exhibit impressive strength across multiple key metrics. In particular, the expanding order book bodes well for 2024. It’s risen 42% this year to a record £921.6m. As a result, 79% of next year’s expected revenue is now covered by the order book.

And that’s not all. Revenue advanced 18% to £472.6m and underlying profit before tax improved 17% to £67.9m. In addition, passive income seekers will have been pleased to see a 21% hike in the total dividend per share to 6.9p.

Underpinning these positive numbers is the desire to modernise defence capabilities on the part of many of Chemring’s customers. The group serves the needs of many NATO members. These countries are investing more heavily in defence and security in light of the growing threats posed by Russia and China.

Demand for the firm’s energetic materials has proved particularly strong this year. Chemring’s expertise in developing explosive and propellant technologies for munitions equips the company with a competitive advantage in a market with high barriers to entry. Few other businesses can rival the group’s offering here.

Supplying Ukraine with military aid has depleted the ammunition stockpiles of many Western powers. In that context, there’s a good chance energetics demand will remain robust throughout next year and beyond as NATO countries rebuild their arsenals.

Risks

There are plenty of reasons to be bullish about the prospects for the Chemring share price. However, potential investors should note there are several risks facing the company too.

Chemring’s price-to-earnings (P/E) ratio of 24 is well above the average across FTSE 250 shares. This might suggest that much of the firm’s expected future growth is accounted for at today’s share price.

Although the valuation’s broadly in line with the company’s five-year average, this may still be a concern for value investors who prefer to find more clear-cut stock market bargains.

Plus, the looming US presidential election next year also presents challenges for the business. Donald Trump intends to drastically reduce or halt military aid to Ukraine if he reclaims the White House. Such a move could feed through into Chemring’s bottom line.

A FTSE 250 growth superstar?

While not without risks, the growth prospects for Chemring shares look promising overall in my view. I think this FTSE 250 stock could enjoy another bumper year in 2024. If I had spare cash, I’d buy today.