Here’s a cheap FTSE 250 stock to buy and hold!

Jabran Khan details a dirt-cheap FTSE 250 stock he would add to his holdings now and hold onto for long-term returns.

| 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.

One FTSE 250 stock I’d happily add to my holdings at current levels is NCC Group (LSE:NCC). Here’s why.

Cyber security boom

NCC Group is an information assurance specialist, based in Manchester, UK. It helps ensure that businesses are compliant with their software licensing and assists with cyber security.

As I write, NCC shares are trading for 188p. At this time last year, the shares were trading for 265p, which is a 29% decrease over a 12-month period.

Macroeconomic issues have placed pressure on FTSE 250 stocks in recent times. Growth stocks in particular have experienced a huge sell-off. Investors have reverted to defensive options given current uncertainty. I believe this has caused issues for NCC’s share price in recent months.

FTSE 250 stocks have risks

One of NCC’s burgeoning divisions is its cyber security work. This is arguably what the business is best known for too. There is always the threat that NCC itself could come under threat from a cyber security attack. This could be catastrophic and cause irreparable damage to its reputation. This would, in turn, negatively affect performance, investment viability, and any returns.

Recent macroeconomic issues have caused many tech growth stocks to slump. No one can accurately predict how long these issues will last and how long tech stocks may be out of favour. Could this be a short-term or long-term issue? There is a very real risk that NCC shares could be suppressed for some time due to factors out of its control.

Why I like NCC shares

NCC has a good track record of performance. I do understand that past performance is not a guarantee of the future, however. Looking back, I can see the FTSE 250 incumbents revenue and gross profit has increased year on year for the past four years.

Coming up to date, city analysts believe NCC’s earnings could rise as much as 25% in the financial year to May. This would leave NCC trading on a forward price-to-earnings growth ratio of 0.7. Any reading below 1 usually indicates a stock is undervalued. It is worth mentioning these are just forecasts and may not come to fruition.

NCC is a respected name in the cyber security market. Despite the current tech sell-off, evolving technology, the digital transformation, and the threat of cyber security that comes with all of this means NCC is operating in a potentially highly lucrative growth market in the years to come. I believe this will help boost performance growth and returns.

NCC shares would also make me a passive income from dividend payments. I do understand that dividends can be cancelled at any time, however. NCC’s current yield stands at 2.4%. The FTSE 250 average yield is just under 2%.

Overall, I believe NCC shares are cheap at current levels. With over three decades experience as well as a good track record of performance, I believe the coming years could be a lucrative time for it. The recent tech sell-off doesn’t concern me. I invest for the long term and I’d add cheap NCC shares to my holdings now and keep hold of them for a long time.

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.

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

Investor looking at stock graph on a tablet with their finger hovering over the Buy button
Investing Articles

Forget Lloyds’ cheap share price! I’d rather consider this FTSE 100 bargain share

Lloyds' share price might appear too cheap to miss at first glance. But this FTSE-listed share could be a better…

Read more »

Market Movers

Down 6% today, is the BT share price gearing up for a larger fall?

Jon Smith points out why the BT share price has tumbled today, but flags up why the reasoning behind the…

Read more »

Silhouette of a bull standing on top of a landscape with the sun setting behind it
Investing Articles

This FTSE 100 stock is down 25% from its 52-week high. Should I buy?

Analysts think the price-to-earnings ratio of this FTSE 100 stock could fall by half in the next two years if…

Read more »

Investing Articles

£10,000 invested in Nvidia stock just two weeks ago is already worth…

Nvidia stock's been making big losses and big gains so far in 2025, at least on paper. But long-term valuation…

Read more »

Stack of British pound coins falling on list of share prices
Investing Articles

Here’s why Lloyds shares have dipped sharply

Lloyds shares got a boost recently when the Treasury petitoned the Supreme Court to go easy on the car loan…

Read more »

A young woman sitting on a couch looking at a book in a quiet library space.
Investing Articles

A £10,000 investment in BAE Systems shares 5 years ago is now worth…

BAE Systems' shares have lifted off since the start of the decade. But can the FTSE 100 defence giant continue…

Read more »

Dividend Shares

£8,000 invested in high-yield dividend stocks could make this amount of passive income

Jon Smith explains how dividend shares with yields in excess of 8% can be used carefully in order to build…

Read more »

Investing Articles

£5,000 invested in Tesco shares 2 years ago is now worth…

Over the last two years, Tesco shares have provided investors with gains of around 30% per year when dividends are…

Read more »