The Motley Fool

3 FTSE 250 stocks to watch for in September

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.

Screen of various price trends, possibly in FTSE 100
Image source: Getty Images.

I’ve been examining the rise of the FTSE 250 lately. And it reminds me I’ve been overlooking the mid-cap index a little, and possibly focusing too much on the FTSE 100. But with plenty of smaller company news coming our way in September, I have the chance to rectify that.

I’ve been following Dunelm Group (LSE: DNLM) for years, often coming close to buying but never quite hitting the button. It’s nothing fancy, and it just sells bedding and other home stuff. But Dunelm is testimony to the success we can have as investors if we just go for simple things done right.

5 Stocks For Trying To Build Wealth After 50

Markets around the world are reeling from the coronavirus pandemic… and with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times.

Fortunately, The Motley Fool UK analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global upheaval…

We’re sharing the names in a special FREE investing report that you can download today. And if you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio.

Click here to claim your free copy now!

The Dunelm share price is up around 50% over the past two years, more than twice the performance of the FTSE 250. So it’s coming through the pandemic crisis pretty well. The firm’s fourth-quarter update looked very impressive, especially in terms of comparison with pre-pandemic figures.

I do wonder if there might be a reverse coronavirus effect that could hurt Dunelm. Have all the millions forced to stay at home stocked up on enough homeware products to keep them going for a while now? Full-year results are due on 8 September. And we’ll then only have to wait until 14 October to hear how Q1 is going. Dunelm  remains an investment candidate for me.

Back to the tables

The hospitality industry was one of the hardest hit by Covid-19. It’s not surprising, then, that shares in Restaurant Group (LSE: RTN) are down around 18% over the past two years. They’ve recovered a little, but they’re still way down on the FTSE 250’s overall performance.

Then again, considering the way eating out came to a complete halt during the crisis, maybe that dip isn’t so bad after all. It makes me wonder if Restaurant Group might have been undervalued prior to the 2020 crash. Looking back a bit further adds to that thought, as we see a five-year fall of close to 60%.

The company recorded a loss for 2020, so we don’t have any P/E valuation for guidance. But hopefully, first-half results on 15 September should help point us in the right direction. Earlier in the year, the company was reporting customer counts getting back close to pre-Covid levels. If that’s been continuing in the months since, and the full-year outlook appears bright, I think the shares might be cheap. We’re not out of coronavirus danger yet, though.

FTSE 250 finance

Finally, I’m looking at Investec (LSE: INVP). It’s a specialist bank for corporate and private clients, offering investment and asset management among its services.

Investec has been generating cash and paying healthy progressive dividends. But earnings have slowed in the last couple of years, and the 2021 dividend came in at little more than half the 2019 figure. Still, if the bank manages to repeat the same payment this year, it would yield around 4.4% — and analysts are predicting a little more.

What’s the downside? Investec is in banking, and that’s taken a right old walloping following multiple sector crises. The bank has seen its shares suffering just as much as FTSE 100 counterpart Lloyds over the past five years. It looks like it might be risky buy, with the economic outlook so uncertain. But I think Investec might be a decent long-term income investment. I’ll be looking out for its trading update due 23 September.

Inflation Is Coming: 3 Shares To Try And Hedge Against Rising Prices

Make no mistake… inflation is coming.

Some people are running scared, but there’s one thing we believe we should avoid doing at all costs when inflation hits… and that’s doing nothing.

Money that just sits in the bank can often lose value each and every year. But to savvy savers and investors, where to consider putting their money is the million-dollar question.

That’s why we’ve put together a brand-new special report that uncovers 3 of our top UK and US share ideas to try and best hedge against inflation…

…because no matter what the economy is doing, a savvy investor will want their money working for them, inflation or not!

Best of all, we’re giving this report away completely FREE today!

Simply click here, enter your email address, and we’ll send it to you right away.

Alan Oscroft owns shares of Lloyds Banking Group. The Motley Fool UK has recommended Lloyds Banking Group. 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.

Our 6 'Best Buys Now' Shares

Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply click below to discover how you can take advantage of this.