2 FTSE 250 shares I’d buy in these volatile markets

I’m watching these two FTSE 250 (INDEXFTSE: MCX) names and I’m ready to pounce if volatility knocks their share prices back.

| 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.

If the share prices of these two FTSE 250 stalwarts are knocked back in the current bout of stock market volatility, I think they will become compelling opportunities for investment. I’m watching closely and I’m ready to pounce!

Precision engineering

The figures in July’s half-year results report from IMI (LSE: IMI) were flat but “in line with expectations.” The firm designs, manufactures and services “highly engineered” products that control the precise movement of fluids, such as valves and actuators. And the report tells us that the precision engineering business is being affected by weakness in the industrial automation segment, but there’s been strong growth in orders and “robust” margins in the critical engineering division.

Right now, the directors are engaged in a strategic review “looking at all aspects” of the business. And despite anticipating a modest decline in organic revenue in the second half of 2019, they expect overall profits to hold flat for the year compared to 2018, “supported by business improvement initiatives.”

I’m optimistic that IMI will emerge from its review process to implement changes that will lead to more effective execution of operations. In the meantime, with the share price close to 915p, the forward-looking earnings multiple sits just below 12 for 2020 and the anticipated dividend yield is around 4.7%. That strikes me as an undemanding valuation, and the stock would sit well in my portfolio.

Pubs and brewing

Greene King (LSE: GNK) delivered steady-as-she-goes full-year results in June with revenue up around 2% and earnings about 3% higher. The directors held the dividend flat for the year.

The Suffolk-headquartered outfit has around 2,730 pubs, restaurants and hotels in England, Wales and Scotland, and around 81% of the estate is either freehold or long leasehold. 1,687 of the properties are retail pubs, restaurants and hotels, and 1,043 are tenanted, leased and franchised pubs.

You might be familiar with the firm’s brands such as Greene King Local Pubs, Chef & BrewerFarmhouse Inns and Hungry Horse. The firm is also known for its brewing business, which has brands such as Greene King IPA, Old Speckled Hen, Abbot Ale and Belhaven Best.

The sector has been troubled for years, resulting in many pub closures, as I’m sure you’ve noticed. In fairness, Greene King’s dividend has been flat for the past four years too, suggesting tough trading conditions. But I think the company’s estate is probably made up of survivors on the pub scene.  

Meanwhile, there’s change at the top with a new chief executive warming up his seat after starting earlier this year, which could usher in positive change for the enterprise. And the valuation looks attractive to me. With the recent share price close to 593p, the forward-looking earnings multiple is around nine for the trading year to April 2021 and the anticipated dividend yield is about 5.6%.

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.

Kevin Godbold has no position in any share 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

Black father and two young daughters dancing at home
Investing Articles

1 FTSE 250 stock I own, and 1 I’d love to buy

Our writer explains why she’s eyeing up this FTSE 250 growth phenomenon, and may buy more shares in this property…

Read more »

View of Tower Bridge in Autumn
Investing Articles

The FTSE 100 is closing in on 8,000 points! Here’s what I’m buying before it’s too late!

As the FTSE 100 keeps gaining momentum, this Fool is on the lookout for bargains. Here's one stock he'd willingly…

Read more »

Investing Articles

3 ideas to help investors aim for a million-pound Stocks & Shares ISA

The UK has a growing number of Stocks and Shares ISA millionaires, and this plan may be one of the…

Read more »

Illustration of flames over a black background
Investing Articles

2 red-hot UK growth stocks to consider buying in April

These two growth stocks are performing well, but can they continue to deliver for investors through 2024 and beyond?

Read more »

Charticle

Is JD Sports Fashion one of the FTSE 100’s best value stocks? Here’s what the charts say!

The JD Sports Fashion share price remains a wild ride during the first quarter. Could it be one of the…

Read more »

Investing Articles

Could the JD Sports Fashion share price double in the next five years?

The JD Sports Fashion share price has nearly halved in the past five years. Our writer thinks a proven business…

Read more »

Bus waiting in front of the London Stock Exchange on a sunny day.
Investing Articles

If interest rate cuts are coming, I think these UK growth stocks could soar!

Falling interest could be great news for UK growth stocks, especially those that have been under the cosh recently. Paul…

Read more »

Investing Articles

Are these the best stocks to buy on the FTSE right now?

With the UK stock market on the way to hitting new highs, this Fool is considering which are the best…

Read more »