2 depressed FTSE 250 stocks I’d buy for long-term growth!

The FTSE 250, like it bigger brother, is a great place to look for value right now. Today I’m looking at depressed travel stocks that I’m backing to take off.

| 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.

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

Image source: Getty Images

The FTSE 250 consists of the 101st to the 350th largest companies listed on the London Stock Exchange. The index contains a number of travel stocks, many of which are yet to recover from the pandemic.

However, I think the travel industry is much closer to pre-pandemic levels than their share prices suggest.

So, here are two travel stocks that I’ve bought or am looking to buy more of for my portfolio.


Things haven’t looked too rosy for easyJet (LSE:EZY) in recent weeks as travel chaos hit UK airports. The firm has cancelled hundreds of flights amid a shortage of staff, partially because of Britain’s tight labour market.

The firm has since lowered its initial guidance. The airline now expects third-quarter capacity (the period to June 30) to be around 87% of 2019 levels. It also said that Q4 capacity would be at 90%.

This isn’t what shareholders wanted to hear, but I don’t think it’s particularly bad news.

Demand for travel is clearly very high after two years of Covid-induced disruption. Passengers are also paying a lot more for their tickets too, although figures highlighting the increasing prices vary.

Labour shortages represent one headwind, fuel costs are another. But, easyJet is relatively well prepared for this. The airline said it was 71% hedged for the second half of the year.

Another headwind is interest rates and its impact on debt repayments. Thankfully, easyJet has no further debt maturities until the 2023 financial year. At the end of the first quarter, the net debt position was £600m.

There’s clearly risk here, but I’m willing to buy more easyJet stock at the current 414p. In the long run, I believe the airline will prosper.

WH Smith

Then there’s WH Smith (LSE:SMWH). Yes, that’s right. OK, it isn’t a typical travel stock for sure, but its fortunes are closely tied to the industry. The company is a leading travel retailer with a presence in a wide range of locations including airports and train stations.

JP Morgan recently raised its price target on the group to 1,900p, considerably above the 1,465p it’s trading for today. The bank said that WH Smith was a fundamentally stronger business now than it was before the pandemic and that performance was improving.

It cited three reasons for the upgrade and highlighted “better category opportunities, with the rollout of the ‘one stop Travel shop’ format; better space growth opportunities, with the acquisitions of InMotion/MRG providing both a US rollout story and further expansion into Europe/Asia; [and] better business mix, with a higher [percentage] of group profits coming from Travel.”

This was reflected in WH Smith’s June update. The company said that sales in the 15 weeks to June 11 were up 107% on the same period in 2019, with its travel division surging by 123%.

Some analysts have even suggested the travel chaos may benefit the firm. If flights are cancelled, the shop loses out, but if passengers are transferred to later flights, WH Smith could gain as bored customers look to pass the time by buying £8 Toblerone bars, among other things.

I already own WH Smith stock, but would buy more at the current price.

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.

James Fox owns shares in easyJet and WH Smith. JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. 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

Smartly dressed middle-aged black gentleman working at his desk
Investing Articles

3 reasons why the Darktrace share price is up 61% over the past month

Jon Smith outlines three of the main reasons in his opinion for the strong bump higher in the Darktrace share…

Read more »

Young woman working at modern office. Technical price graph and indicator, red and green candlestick chart and stock trading computer screen background.
Investing Articles

Should I snap up GSK shares at £14?

The GSK share price has slumped. Should investors pile in or steer clear? Roland Head investigates.

Read more »

pensive bearded business man sitting on chair looking out of the window
Investing Articles

As NIO stock continues to fall, should I buy the dip?

Jabran Khan looks at why NIO stock has dropped in recent months and decides if the shares have fallen enough…

Read more »

Close-up Of A Piggybank With Eyeglasses And Calculator On Desk
Investing Articles

How I’d aim for £10,000 a year in passive income, from £100 per month

We'd all like to have a bit of passive income coming in to supplement our retirement, wouldn't we? Here's how…

Read more »

Storytelling image of a multiethnic senior couple in love - Elderly married couple dating outdoors, love emotions and feelings
Investing Articles

Here’s a cheap FTSE stock with a 6% dividend yield. Should I buy it?

Vodafone is a FTSE stock with an attractive dividend yield, which looks to be on the path to recovery. Here's…

Read more »

Young mixed-race woman looking out of the window with a look of consternation on her face
Investing Articles

As the Centrica share price continues to climb, am I too late to buy shares?

This Fool documents the recent rise of the Centrica share price and decides if adding the shares to his holdings…

Read more »

British Pennies on a Pound Note
Investing Articles

Even at 10p, I see the Cineworld share price as expensive. Here’s why

The Cineworld share price has crumbled to around 10p. But the cinema chain still holds no appeal for our writer…

Read more »

Shot of a senior man drinking coffee and looking thoughtfully out of a window
Investing Articles

Should I buy Aviva shares now?

With Aviva shares near 440p, here's what I'd do about this stock now as the business throws off cash and…

Read more »