2 dirt-cheap FTSE 250 shares to buy

The FTSE 250 index has increased by 3.6% in August so far compared to the month before. But dirt-cheap stocks are still available. Here are two of them.

| 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.

This is turning out to be a good month for the FTSE 250 index. In August so far, its average value is up 3.6% from July. This is the fastest growth seen in four months and also the first time that the index average is over 23,000. 

With this as the backdrop, it is hardly surprising that FTSE 250 stocks are pricier than usual. But if I look hard enough, I can still find stocks that are still trading at a price lower than their performance would suggest. These dirt-cheap stocks can be potentially good investments for me. 

Here are two of them.

#1: Plus500: a high-dividend-yield FTSE 250 share 

The trading platform is presently trading at a price-to-earnings (P/E) ratio of 4.4 times. On the face of it, there appears to be some justification for it. One, its share price as of right now, is actually lower than it was last year on this date. Two, its latest results look discouraging too. In the first half of 2021, its revenue fell by 39% and its profits by 48% from the same time last year. 

However, there is another side to its story too. Consider its share price. While it is true that on a point-to-point basis it has declined, if I compare the average of the past 12 months with the year before, there is still an increase. Also, its latest results look disappointing only because last year was exceptionally good for Plus500 (LSE: PLUS).  As the company said in its results last year, the robust increase was driven by heightened volatility in unprecedented market conditions”.

Moreover, compared to 2019, the last normal year before the pandemic, its performance is still significantly improved. The company is also optimistic about its future, and last but not least, it has  a significant dividend yield of 7.2% compared to 1.8% for the FTSE 250 index as a whole. 

#2. CMC Markets: Dirt-cheap stock with good prospects 

Another financial trading platform, this FTSE 250 stock has other parallels with Plus500. CMC Markets (LSE: CMCX) also has a relatively low P/E of 6.8 times. It also has a high dividend yield of 7.3%. And there are other positives to the stock too.

Unlike Plus500, its numbers are more encouraging. For the year ending 31 March, 2021, its pre-tax profits increased by an impressive 127% and its revenues were substantially increased as well. Its latest trading update for the quarter ending 30 June, the company also reported client numbers at similar levels to those last year. However, it does appear that it, too, could see some moderation in results for the first half of the year, based on client trading activity. Nevertheless, it has a positive outlook.

Also, its share price has increased by 38% over the past year. Even on average, these increases have been sustained for some time now. If there is a consistent decline in trading activity, though, the stock increase may not continue. Based on the FTSE 250 index’s recent performance, I am more positive than not about it, however. 

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.

Manika Premsingh 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.

More on Investing Articles

Young mixed-race couple sat on the beach looking out over the sea
Investing Articles

I’d put £20K in an ISA now to target a £1,900 monthly second income in future!

Christopher Ruane shares why he thinks a long-term approach to investing and careful selection of shares could help him build…

Read more »

Mature couple at the beach
Investing Articles

6 stocks that Fools have been buying!

Our Foolish freelancers are putting their money where their mouths are and buying these stocks in recent weeks.

Read more »

Black woman using loudspeaker to be heard
Investing Articles

I was right about the Barclays share price! Here’s what I think happens next

Jon Smith explains why he still feels the Barclays share price is undervalued and flags up why updates on its…

Read more »

Investing Articles

Where I’d start investing £8,000 in April 2024

Writer Ben McPoland highlights two areas of the stock market that he would target if he were to start investing…

Read more »

View of Tower Bridge in Autumn
Investing Articles

Ahead of the ISA deadline, here are 3 FTSE 100 stocks I’d consider

Jon Smith notes down some FTSE 100 stocks in sectors ranging from property to retail that he thinks could offer…

Read more »

Young female business analyst looking at a graph chart while working from home
Investing Articles

Why I think Rolls-Royce shares will pay a dividend in 2024

Stephen Wright thinks Rolls-Royce shares are about to pay a dividend again. But he isn’t convinced this is something investors…

Read more »

Investing Articles

1 of the best UK shares to consider buying in April

Higher gold prices and a falling share price have put this FTSE 250 stock on Stephen Wright's list of UK…

Read more »

Person holding magnifying glass over important document, reading the small print
Investing Articles

The market is wrong about this FTSE 250 stock. I’m buying it in April

Stephen Wright thinks investors should look past a 49% decline in earnings per share and consider investing in a FTSE…

Read more »