2 dirt-cheap FTSE 250 stocks I’d buy with £2,000 today

These two FTSE 250 (INDEXFTSE: MCX) stars provide plenty of upside at current share prices.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

IMI (LSE: IMI) found itself backsliding in Thursday trading after a less-than-enthusiastic response to Q1 trading numbers. The FTSE 250 share was last dealing 6% lower on the day.

The business — which provides a range of engineering products and services for the control of fluids — declared: “Results in the first quarter of 2018 reflect a continuation of the improved trading experienced across the group through 2017, albeit with continuing uncertainty in some segments.”

While it added that trading remains consistent with expectations at the moment, investors have taken fright over the uncertain outlook for some of its segments.

But this was not the only item of concern as guidance around the issue of severe foreign exchange tailwinds also prompted some to cash out. IMI said that, should sterling’s value against the euro and US dollar stand at the average rate seen during January-March, this would create an exchange rate headwind of some 4% for both sales and profits in 2018.

Self-help scheme on track

The news from the Birmingham firm was not all worrying, however. Organic revenues in the three months to March were up 2% year-on-year, prompting IMI to comment that sales on a comparable basis should still be up for the first half of the year from the corresponding 2017 period.

What’s more, the engineer continued to laud the impact that its self-help measures are having, commenting: “Our new product pipeline is developing well, the operational performance of our manufacturing facilities has further improved and the new systems and processes we are putting in place are enabling us to do business more efficiently.” 

It added that “reorganisation activities across the business are progressing well and according to plan.”

Sure, the outlook in some of IMI’s markets may remain patchy for a little while longer, but I believe this is reflected in the company’s low forward P/E rating of 15.1 times, a multiple created by expectations of a 7% earnings rise in 2018 (a 9% profits advance is forecast for 2019 too).

And with its raft of operational improvements clicking through the gears nicely, I reckon this low ratio provides plenty of upside in the years to come.

Predicted dividends of 40.6p and 42p for this year and next, figures that yield 3.9% and 4% respectively, add a very tasty sweetener.

In the fast lane

National Express Group (LSE: NEX) is another FTSE 250 bargain I’d be happy to splash out on today.

With earnings expected to keep booming at double-digit percentages — a 10% advance is forecast for 2018 — the transportation titan can be picked up on a forward P/E ratio of 12.5 times. What’s more, a predicted dividend of 14.9p per share, yielding a chubby 3.7%, gives share pickers further reason to invest.

An extra 4% profits rise is estimated for next year, while an anticipated 16p dividend moves the yield to 4%.

As I commented recently, National Express’s rolling expansion programme abroad is really delivering the goods, and revenues in its North American and Spanish ALSA divisions rose by a chunky 10.1% and 3.6% respectively last year. I am confident that the bus giant is on course to deliver strong shareholder returns long into the future.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended IMI. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Investor looking at stock graph on a tablet with their finger hovering over the Buy button
Investing Articles

Forget Lloyds’ cheap share price! I’d rather consider this FTSE 100 bargain share

Lloyds' share price might appear too cheap to miss at first glance. But this FTSE-listed share could be a better…

Read more »

Market Movers

Down 6% today, is the BT share price gearing up for a larger fall?

Jon Smith points out why the BT share price has tumbled today, but flags up why the reasoning behind the…

Read more »

Silhouette of a bull standing on top of a landscape with the sun setting behind it
Investing Articles

This FTSE 100 stock is down 25% from its 52-week high. Should I buy?

Analysts think the price-to-earnings ratio of this FTSE 100 stock could fall by half in the next two years if…

Read more »

Investing Articles

£10,000 invested in Nvidia stock just two weeks ago is already worth…

Nvidia stock's been making big losses and big gains so far in 2025, at least on paper. But long-term valuation…

Read more »

Stack of British pound coins falling on list of share prices
Investing Articles

Here’s why Lloyds shares have dipped sharply

Lloyds shares got a boost recently when the Treasury petitoned the Supreme Court to go easy on the car loan…

Read more »

A young woman sitting on a couch looking at a book in a quiet library space.
Investing Articles

A £10,000 investment in BAE Systems shares 5 years ago is now worth…

BAE Systems' shares have lifted off since the start of the decade. But can the FTSE 100 defence giant continue…

Read more »

Dividend Shares

£8,000 invested in high-yield dividend stocks could make this amount of passive income

Jon Smith explains how dividend shares with yields in excess of 8% can be used carefully in order to build…

Read more »

Investing Articles

£5,000 invested in Tesco shares 2 years ago is now worth…

Over the last two years, Tesco shares have provided investors with gains of around 30% per year when dividends are…

Read more »