2 FTSE 250 stocks I’d sell in June

G A Chester reveals two FTSE 250 (INDEXFTSE:MCX) stocks he’d ditch and the reasons why they’re on his sell list.

| 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.

Shares of LondonMetric Property(LSE: LMP) have been hitting new all-time highs this month. The company, which released its annual results this morning, was formed by the merger of Metric and London & Stamford in 2013 and the combined group has provided investors with a five-year annualised total return of 15.2%, compared with 6.8% for the FTSE 100.

The directors are property veterans and the company is focused on “sectors supported by structural changes in shopping habits,” notably the digital revolution. In today’s results, management said retail distribution assets now represent 69% of the portfolio, compared with 21% in 2013.


LondonMetric reported an uplift in EPRA net asset value (NAV) per share of 10.3% on last year to 165.2p. EPRA earnings per share (EPS) increased 3.7% to 8.5p and the board lifted the dividend by 5.3% to 7.9p.

The share price is 192p, so the shares are trading at a 16.2% premium to NAV. Put another way, if you’re investing at the current price, you’re having to pay £1 for every 86p worth of assets. Meanwhile, the price-to-earnings (P/E) ratio is 22.6 and the dividend yield is 4.1%.

I believe LondonMetric’s valuation is too rich. Just as management is unemotional about its property portfolio and sells and recycles the capital if an asset no longer justifies continued ownership, I see now as a good time to sell the company’s shares and recycle the capital into a stock with better value credentials in terms of NAV, P/E and dividend yield.

Contrarian corker?

Jupiter Fund Management(LSE: JUP) has delivered a five-year annualised total return of 11.2% for investors. And this despite a recent share price decline from an all-time high of 631p in the first week of January to around 450p today.

My Foolish colleague Harvey Jones believes this looks like a buying opportunity and fellow Fool Royston Wild is equally enthused by what he reckons could be a contrarian corker. At the current share price, underlying EPS of 34.2p gives a trailing P/E of 13.2, while the running dividend yield is 7.2%, based on a 17.1p ordinary dividend and 15.5p special. On the face of it, the valuation is not unattractive, even with City forecasts of dips in EPS and dividends this year. These raise the P/E to 13.4 and reduce the yield to 6.6%.

Stage of the cycle

Jupiter’s flagship Dynamic and Strategic bond funds have been hugely popular after a 30-year bull run in fixed income and the fund house has also enjoyed the nine-year bull run in equities, driven by the asset-price-inflating policies of governments and central banks.

However, investors drew a net £1.3bn out of the group’s funds in Q1 this year and I fear this is a bad stage in the cycle to be investing in Jupiter. Bull runs don’t last forever and sooner or later the company will likely be hit with brutal EPS and dividend downgrades. On the basis that it could well be sooner rather than later, this is a stock I’d be happy to sell at this time.

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.

G A Chester has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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

Man writing 'now' having crossed out 'later', 'tomorrow' and 'next week'
Investing Articles

These cheap UK shares look way too good to ignore right now

With the UK stock market reaching new highs recently, this Fool plans to grab these two remaining cheap shares before…

Read more »

Young Woman Drives Car With Dog in Back Seat
Investing Articles

This unloved UK stock could rise 120%, according to a City broker

Some City analysts reckon a once-popular UK stock can recover from its massive recent decline and go on to more…

Read more »

Investing Articles

These FTSE dividend shares all offer 6%+ yields!

Paul Summers highlights three FTSE dividend shares that offer big yields. But is the passive income stream sufficient to offset…

Read more »

Young black colleagues high-fiving each other at work
Investing Articles

Is Legal & General Group one of the FTSE 100’s greatest value shares?

Legal & General shares boast low P/E ratios and massive dividend yields. Could they be one of the London stock…

Read more »

Front view photo of a woman using digital tablet in London
Investing Articles

I’m looking for the best FTSE 100 value stocks to buy now. Have I found them?

Barclays, NatWest, and Imperial Brands shares are recovering strongly. But these FTSE 100 stocks still trade on rock-bottom earnings multiples.

Read more »

Businesswoman analyses profitability of working company with digital virtual screen
Investing Articles

Where on earth will Nio stock be in 1 year?

Nio stock has demonstrated extraordinary volatility over the past 12 months, but where will it be in a year's time?…

Read more »

Young mixed-race woman jumping for joy in a park with confetti falling around her
Investing Articles

6.9% dividend yield! 2 cheap stocks to consider for a £1,380 passive income

Looking for a market-beating passive income? These FTSE 100 and FTSE 250 dividend stocks could provide a healthy second income…

Read more »

Mature black couple enjoying shopping together in UK high street
Investing Articles

Potentially 34% undervalued, should I be watching the boohoo share price?

The boohoo share price has seen a rocky few years, but with signs that the economy is improving, could this…

Read more »