2 FTSE 250 stocks I’d buy today

The FTSE 250 index can be a great place to find attractive stocks. Here are two shares in the index Edward Sheldon likes right now.

| 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.

The FTSE 250 index can be a great place to find attractive stocks. In this area of the UK stock market, many companies are growing rapidly yet still operate very much under the radar.

Here, I’m going to highlight two FTSE 250 stocks I’d buy for my own portfolio today. I believe both stocks have the potential to deliver the winning combination of capital gains and dividends in the long run.

Inflation Is Coming

Inflation is out of control, and people are running scared. But right now there’s one thing we believe Investors should avoid doing at all costs… and that’s doing nothing. That’s why we’ve put together a special report that uncovers 3 of our top UK and US share ideas to try and best hedge against inflation… and better still, we’re giving it away completely FREE today!

Click here to claim your copy now!

Britons are spending their Covid-19 savings here 

One FTSE 250 stock that strikes me as a ‘buy’ right now is Howden Joinery (LSE: HWDN). It’s a leading supplier of fitted kitchens that has over 730 depots across the UK.

Howden Joinery posted a solid set of full-year 2020 results last month. For the year ended 26 December 2020, sales only fell 2.3%. That’s pretty impressive given that the UK experienced the worst economic conditions in 300 years.

However, what stands out to me is that second half sales were actually up a huge 16% compared to the equivalent period in 2019. This reinforces my view that a large chunk of the money Britons have saved over the last year on lockdown is going to flow into home renovations.

It’s also worth noting that Howden Joinery declared a special dividend of 9.1p for the year, in lieu of the cancelled final dividend for 2019. This suggests to me management is confident about the future.

There are risks to be aware of here, of course. In its full-year results, management said that given the economic uncertainties, it remains “cautious” about underlying market conditions.

Overall however, I see a lot of investment appeal here. The stock currently trades on a forward-looking price-to-earnings (P/E) ratio of 22, which I feel is quite reasonable given the growth potential.

One of the best FTSE 250 growth stocks

Another FTSE 250 stock I like right now is Softcat (LSE: SCT). It’s a leading IT infrastructure company that provides solutions in relation to cloud computing, cybersecurity, and data analytics. Its customers include the likes of Virgin Money, Nuffield Health, and Henry Boot.

Softcat is seeing strong demand for its services at the moment due to the enormous amount of digital transformation that’s occurring within the UK. Over the last two years, for example, revenue has jumped 35%.

Looking ahead, I expect the company to keep growing at a healthy clip. Analysts expect revenue growth of about 10% for the year ending 31 July. That’s followed by top-line growth of 9% the next year. Given its broad exposure to the technology industry, I see the stock as a great ‘picks-and-shovels’ play on the technology theme.

Softcat is quite an expensive stock. Currently, its forward-looking P/E ratio is about 36.6. This adds some risk to the investment case. If future performance is disappointing, the stock could fall significantly.

However, Softcat appears to be a high-quality business that’s both very profitable (three-year average return on equity of 60%) and financially strong. So, I’m comfortable paying a higher valuation for this FTSE 250 stock.

FREE REPORT: Why this £5 stock could be set to surge

Are you on the lookout for UK growth stocks?

If so, get this FREE no-strings report now.

While it’s available: you'll discover what we think is a top growth stock for the decade ahead.

And the performance of this company really is stunning.

In 2019, it returned £150million to shareholders through buybacks and dividends.

We believe its financial position is about as solid as anything we’ve seen.

  • Since 2016, annual revenues increased 31%
  • In March 2020, one of its senior directors LOADED UP on 25,000 shares – a position worth £90,259
  • Operating cash flow is up 47%. (Even its operating margins are rising every year!)

Quite simply, we believe it’s a fantastic Foolish growth pick.

What’s more, it deserves your attention today.

So please don’t wait another moment.

Get the full details on this £5 stock now – while your report is free.

Edward Sheldon owns shares in Softcat. The Motley Fool UK has recommended Howden Joinery Group and Softcat. 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.

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 considered, so you should consider taking independent financial advice.

More on Investing Articles

Playful senior couple in aprons dancing and smiling while preparing healthy dinner at home
Investing Articles

Best British dividend stocks for July

We asked our freelance writers to share the top income stocks they’d buy in July, which included Dividend Aristocrats and…

Read more »

Warren Buffett at a Berkshire Hathaway AGM
Investing Articles

How I’d apply the Warren Buffett method to buying shares

Learning from billionaire investor Warren Buffett, our writer explains his own approach to investing in shares for his portfolio.

Read more »

pensive bearded business man sitting on chair looking out of the window
Investing Articles

This dividend share yields under 1% — but I’d still buy it

This dividend share has a low yield. So why would our writer consider adding it to his income portfolio?

Read more »

Young lady working from home office during coronavirus pandemic.
Investing Articles

Looking for a good share to buy? Here’s how I do it

Here are two approaches our writer uses when hunting for a good share to buy for his portfolio to aim…

Read more »

man in shirt using computer and smiling while working in the office
Investing Articles

One cheap FTSE 100 share I’d buy for a new bull market

This FTSE 100 share is unloved and starting to look seriously cheap, says Roland Head.

Read more »

Young brown woman delighted with what she sees on her screen
Investing Articles

How I’d invest £500 in UK shares in 2022

Investing a small amount of capital in UK shares can result in high commission costs. Zaven Boyrazian explains how to…

Read more »

Black woman using loudspeaker to be heard
Investing Articles

2 battered FTSE dividend stocks to buy in July!

I'm still searching the FTSE 100 for the best bargains to buy. I think these two big dividend shares are…

Read more »

Woman pulling baffled face
Investing Articles

Can I trust Lloyds’ 6.1% dividend yield?

The Lloyds' share price has sunk in 2022, causing the bank's dividend yield to leap. But can I really trust…

Read more »