Here’s 1 of the best bargain stocks on the FTSE 250 right now!

Jabran Khan details a FTSE 250 stock he believes is one of the best bargains out there and could be a good addition to his portfolio.

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I believe that FTSE 250 incumbent (LSE:MONY) could be a bargain buy for my portfolio right now! Here’s why.

Saving consumers money

Moneysupermarket is one of the UK’s leading comparison sites for insurance, money, home services, and other products. The purpose of the site is to help households save money on bills by providing free access to online tools that enable them to compare and switch products. 

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I can answer a few questions on the site regarding the product I desire and will be presented with a list of deals. I can also opt to get a reminder when my product is up for renewal too! In 2020, the Moneysupermarket professed to saving an estimated £2bn for its users on household bills.

As I write, shares in Moneysupermarket is trading for 216p per share. A year ago, shares were trading for 246p, which means shares are down 12%. It is worth noting that shares are still trading below pre-pandemic levels currently. I see a cheap stock that could blossom into a high-returning addition to my portfolio over the long term. 

Why I rate Moneysupermarket as a FTSE 250 bargain

  1. Moneysupermarket is a recognisable and powerful brand that has built a loyal following over the years. I think this will help it return to former glories and provide future returns to potential investors like myself. In addition to this, it has exposure to multiple markets. This provides it a safety net as its earnings are diversified. If one area were to struggle, another could pick up the slack.
  2. When looking for the best stocks, there are certain metrics to use to decide if a company is high quality. Two of these metrics are consistently high margins and returns on capital employed. Moneysupermarket meets both these criteria, which is a good sign.
  3. Finally, Moneysupermarket has a robust balance sheet, which means it could stave off any financial headwinds it faces. It also possesses a healthy dividend yield of over 5%. This is higher than the FTSE 100 average of 3%.
  4. Moneysupermarket has a good track record of performance. I understand the past is no guarantee of the future but it is still a good gauge for me. Before the pandemic struck, it reported increases in revenue and gross profit for three years running.

Risks and verdict

I may class MONY as a FTSE 250 bargain but it does come with risks. Firstly, the comparison website market is saturated and it does have some intense competition. This could hinder its progress if competitors were to gain any advantage.

Another risk for MONY is that the Competition and Markets Authority (CMA) keeps a keen eye on operations of comparison sites. Other firms have been fined for questionable practises. Since these fines, there is more scrutiny on such firms.

Overall, I would happily buy Moneysupermarket shares for my portfolio at current levels. Its share price looks relatively cheap compared to the overall potential going forward. I would expect the share price to steadily rise as reopening continues as well. It also offers a juicy dividend yield to make me a passive income and could be one of the best buys on the FTSE 250 right now.

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Jabran Khan has no position in any shares mentioned. The Motley Fool UK has recommended 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.

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