2 FTSE 250 penny stocks I’d buy as the index hits new highs

These FTSE 250 penny stocks are poised to gain from the stock market rally as the economy reopens and their businesses can take off.

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The FTSE 250 index breached 22,000 earlier this month. And it has consistently stayed above that level since. As a result, this is the best month on record for the index. The downside is that I now have fewer FTSE 250 penny stocks to choose from. 

There are a few around, however, and among them there are two I like.

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Barely a penny stock

The first is Cineworld (LSE: CINE), whose share price is just shy of 100p. In other words, it barely qualifies as a penny stock, but it is there. The cinema chain’s share price gathered enough momentum by early March to cross 100p. It even managed to stay there till early April.

But it has been trading at sub-100p levels for around a week now. The drop to these levels came around the time that news of Tom Cruise’s “Top Gun: Maverick”, which was expected to be a big summer release but will now be in theatres only by November. 

But going by the stock market rally and the fact that shareholders just approved suspension of Cineworld’s borrowing limits, I think its share price should pick up soon. I would expect it to continue to gain as cinema footfalls increase later in the year and other promising films hit the screens. 

A FTSE 250 stock with a strategy

At a price of 77p, the UK Commercial Property Real Estate Investment Trust (LSE: UKCM) is another FTSE 250 penny stock to consider. Its share price has been pretty volatile in the past year but has hit a groove since early 2021. It has been in a broad upswing since mid-January. 

It has interests in four kinds of commercial properties – industrial, retail, commercial, and leisure. As business reopens, it should recover slowly from what has been a difficult year. 

Its latest results available are for the half-year ending 30 June 2020, which is a bit dated now. This makes its performance difficult to assess for sure. But indicators of performance since are positive. Its rent collection for the first quarter of 2021 was at 84%. The company has benefited from tenants that have been part of growing sectors in 2020 like Ocado and Amazon.

The company also pays a dividend and has a prudent strategy for the rest of 2021. It aims at investing in supermarkets and logistics, which are among the sectors “where the structural drivers of demand are positively impacted by or largely insulated from the ongoing pandemic” as per the company’s release. 

The upshot

Still, like in the case of Cineworld, until it is well and truly back in business we cannot be sure that it can manage sustainable growth. The pandemic’s toll on companies has set them behind significantly and it will be a while before they are back on track. 

On the other hand, there are stocks that have breezed through 2020 and still show promising prospects. This includes miners, healthcare companies, online marketplaces, and others. I would consider these too, before buying these FTSE 250 penny stocks.

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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Manika Premsingh owns shares of Ocado Group. The Motley Fool UK owns shares of and has recommended Amazon. The Motley Fool UK has recommended Ocado Group and recommends the following options: long January 2022 $1920 calls on Amazon and short January 2022 $1940 calls on Amazon. 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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