A sinking FTSE 250 stock (and a falling AIM share) to buy in July!

Stacks of FTSE 250 and AIM-listed shares have plummeted in value as stock market volatility has increased. Here are two top dip buys I like for July.

| More on:
man in shirt using computer and smiling while working in the office

Image source: Getty Images

The threat of tightening regulations is a constant risk to gambling stocks like FTSE 250-quoted 888 Holdings (LSE: 888).

The UK government, for instance, is set to announce reforms to the industry very soon. And if rumours are to be believed it could be scary reading for gaming companies. The Times has reported that measures like maximum stakes and the banning of free bets could be introduced.

But despite this danger I believe 888 in particular could be a great dip buy following recent share price weakness.

City analysts think annual earnings here will rise 37% in 2022 and a further 25% next year. These forecasts leave 888 shares looking dirt cheap. They command a sub-1 forward price-to-earnings growth (PEG) ratio of 0.2.

Expanding for growth

As a long-term investor I’m excited by 888’s aggressive expansion programme that could light a fire under earnings growth.

The firm’s in the process of acquiring William Hill, a move that will boost its size between three and four times current levels. It will also significantly bolster its position in Europe and gives 888 one of the most popular brands in the business.

The FTSE 250 firm also has excellent revenues opportunities in the US, a fast-growing market where the business has also been expanding to capitalise on loosening gambling laws.

Research suggests that the global online gambling market will enjoy compound annual growth of 11.7% between now and 2030. Growth in the US is expected to be even stronger in the period at 11.9%. I think internet gambling giant 888 is in great shape to capitalise on this trend.

A falling AIM share

Like 888 Holdings, Begbies Traynor Group (LSE: BEG) has also been extra active on the acquisition front in recent years.

Its commitment to M&A has seen the company significantly broaden its range of services and expand its geographical footprint. This in turn has led to a long record of robust annual earnings growth. And pleasingly, the AIM-quoted insolvency specialist is showing no signs of slowing down. Just last week it sealed the purchase of chartered surveyor Budworth Hardcastle.

A top stock for tough times

Begbies Traynor’s share price has risen strongly in the past four months. This is perhaps no surprise as demand for its insolvency services rises when economic conditions worsen. Yet it’s fallen back a tad more recently and so I’m thinking of jumping in.

Insolvency rates in the UK have ballooned. Latest government data showed a leap of almost 80% year-on-year in May to 1,817. The number is likely to grow still further as the UK economy likely enters a recession.

City analysts think Begbies Traynor’s earnings will grow 8% this financial year (to April 2023) and 3% next year. This leaves it trading on a forward price-to-earnings (P/E) ratio of 14.7 times. In my opinion this is a bargain given the company’s long track record of earnings increases and growing business opportunities.

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.

Royston Wild 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 female analyst working at her desk in the office
Investing Articles

2 FTSE 100 dividend shares I’ve bought with yields above 8%

As inflation rises, our writer is trying to earn passive income by owning dividend shares. Here are two he's bought…

Read more »

Warren Buffett at a Berkshire Hathaway AGM
Investing Articles

How I’d use the Warren Buffett method to profit from the next bull market

How can Warren Buffett's guidance help us to pick the most profitable companies to invest in over the next couple…

Read more »

young woman celebrating a victory while working with mobile phone in the office
Investing Articles

Here’s how much I’d have now if I’d invested £1k in Scottish Mortgage shares 5 years ago!

Scottish Mortgage shares came crashing down last year after a multi-year bull run. But would I have made money if…

Read more »

Mixed-race female couple enjoying themselves on a walk
Investing Articles

How I’m using £120 a month to aim for £12,500 a year in passive income!

Everyone wants to earn passive income, right? Well I'm looking to invest the money I don't need now, to generate…

Read more »

Close-up of British bank notes
Investing Articles

Here’s the Legal & General dividend forecast for 2022 and 2023

Legal & General has paid out some monster dividends in recent years. Here, Edward Sheldon looks at the dividend forecast…

Read more »

Female analyst sat at desk looking at pie charts on paper
Investing Articles

Is now the time to be snapping up Rolls-Royce shares?

Rolls-Royce shares have faced numerous setbacks in the recent past. However, could now be the time to buy? This Fool…

Read more »

Investing Articles

Here’s why GSK and Haleon shares have tanked this week

Shares in both GSK and its spin-off Haleon have plummeted this week. Edward Sheldon looks at what's going on and…

Read more »

Playful senior couple in aprons dancing and smiling while preparing healthy dinner at home
Investing Articles

My Aviva shares leapt 17%. Should I sell or buy more?

Aviva shares have soared by a sixth since I bought them in late July. Should I sell after this sudden…

Read more »