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I’d buy one of these top FTSE 250 stocks today, but I’m shunning the other

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Dice engraved with the words buy and sell, possibly in FTSE 100
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I’m on the hunt for top FTSE 250 stocks, as the index hits an all-time high. Companies on the index have scope to fly as the recovery kicks in, but these two are experiencing mixed fortunes today. I’d only buy one of them.

Recruitment specialist PageGroup (LSE: PAGE) has weathered the pandemic in good shape, given the impact on the jobs market. The stock lost half its value in last year’s March crash, but has been a strong recovery play since.

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The PageGroup share price is up 44% over a year, although it still trades around 7% lower than three years ago. However, the top FTSE 250 stock is up a thumping 9.99% this morning, after CEO Steve Ingham reported “increased confidence in our outlook for the year” and predicted full-year operating profit of between £90m and £100m.

The PageGroup share price tempts me

PageGroup has demonstrated the importance of geographical diversification, as gross profits in the Asia-Pacific region raced ahead of Europe and the US, growing 15.3% and by a thumping 45% in China. By contrast, US profits fell 9% and UK profits 11%.

March was a record month in Germany, Italy, Spain and South East Asia, despite continued and increasing Covid restrictions. PageGroup looks solid with net cash of £136m, up from £83m in Q1 last year.

I can see why this is the top performing FTSE 250 stock this morning. Assuming the global economy recovers this year, PageGroup looks a good way to play it.

My biggest concern is that the recovery is priced in after strong share price growth, while lockdowns have returned in a number of the group’s markets. Today’s jump could be premature. Gross profit may be up 31% on a year ago but it is still down 2% on 2019. However, I remain optimistic.

I’m not so sure about the travel industry though. I’ve been wary about taking a punt on this ravaged sector, although some bargain hunters have benefited. Vaccine hopes have driven the sector higher in the last six months.

I’m not buying this top FTSE 250 stock

Europe’s largest travel company TUI (LSE: TUI) is up 108% in the last six months. However, investors are running for cover today.

The TUI share price is down almost 7% after the Anglo-German travel group announced it will issue up to £350m of convertible bonds to boost liquidity as Covid travel restrictions drag on. The bonds will pay between 4.5% and 5% a year, until April 2028. 

This is TUI’s second fundraising of the year. In January, it raised €545m from shareholders in a €1.8bn financing package agreed with the German government, banks and its biggest shareholder, Alexey Mordashov.

While TUI is among the top performing FTSE 250 stocks in the last six months, I’m staying grounded. The group expects peak summer capacity to be 75% of 2019 levels this year, but that looks optimistic given continuing restrictions.

I could be unduly pessimistic. There is massive pent-up demand for travel, and bookings will go crazy when restrictions ease. Recent investors have been rewarded for their bravery, while this year’s fundraising should help TUI weather short-term storms. I still think PageGroup is the safer recovery play.

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Harvey Jones 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.

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