Many investors fill their portfolios with FTSE 100 blue-chip stocks. While there’s nothing wrong with this approach, I think it’s a mistake to rely on the lead index alone. There are plenty of high-quality businesses in the FTSE 250 as well. I reckon these shares could yield even higher returns for investors in the long run.
With that in mind, here are my top five FTSE 250 growth stocks I’d buy right now.
FTSE 250 growth stocks
Watches of Switzerland has seen sales jump over the past year. The company, which is the UK’s largest Rolex retailer, has benefitted from a surge in domestic demand. Stuck-at-home consumers have been spending their cash on luxury items rather than out-of-bounds holidays and experiences. While the group’s growth may slow in 2021, I’m confident that Watches’ position in the market, which is a significant competitive advantage, will help the FTSE 250 business drive growth in the years ahead.
Talking of competitive advantages, Howden Joinery has one of the best in its sector, in my opinion. The company’s unique operating model, where depot managers are rewarded based on sales, has helped the enterprise gain somewhat of a reputation for quality and cost. In previous years, this has proved to be a strong growth driver. And I think that’s likely to continue. Howden’s reputation in the trade remains healthy, and as long as management doesn’t make any serious mistakes, I think the business will remain the go-to store for many customers.
Estate agent Savills is another FTSE 250 business I believe has a robust competitive advantage. The company’s brand is recognised the world over, which helps attract customers to its offer. I think that’s part of the reason why the firm’s revenues have jumped nearly 80% in six years. A booming housing market has also been a strong tailwind for the enterprise. As such, as long as the housing market remains buoyant, I reckon shares in Savills will continue to generate strong total returns for investors.
Temporary headwinds
Wizz Air Holdings has taken the European airline market by storm in recent years. The FTSE 250 group’s low-cost offer has attracted consumers, while management’s and conservative operating model and has kept costs low. Before the pandemic struck, Wizz’s balance sheet was flush with cash, unlike many of its competitors. This has helped the business weather the storm and I reckon it’ll allow Wizz to take market share when the skies across Europe open again. While airlines may not be everyone’s cup of tea, I think Wizz’s future potential is incredibly exciting.
Finally, I think investors could benefit from the UK economic recovery by acquiring shares in challenger bank OSB. Formerly One Savings, this financial enterprise is primarily a mortgage lender. Shares in the firm have come under pressure in 2020 due to concerns about the state of the UK housing market. However, so far, the impact on the business has been minimal, and analysts are expecting a return to growth next year. As such, I think now could be a good opportunity to take advantage of the current low price of the shares and buy this growth stock.
