During uncertain times, the FTSE 250 can often fall harder than its bigger sibling. Exactly that has happened over the past 12 months, with the mid-cap index falling 19%. The FTSE 100, meanwhile, has been largely unshaken, up 1.3%.
I reckon we can find some attractive buys when the FTSE 250 is down. Here are three I think investors could profit from in 2023.
Health
The Primary Health Properties (LSE: PHP) share price is down 27% over the past 12 months.
Primary Health is a real estate investment trust (REIT). And real estate is seriously out of favour with UK investors right now. It’s understandable. Commercial properties, like shopping centres, are under serious economic pressure.
But does that mean healthcare properties are in less demand? Do healthcare REITs deserve to be as lowly valued as the rest of the sector?
The main danger I see is that NHS spending on private services could be squeezed a little. After all, around 90% of Primary Health’s rental income comes from the UK government. But then, our ageing population combined with annual virus assaults suggests demand could continue for decades.
Oh, and the stock is offering a 6% forecast dividend yield.
Food
Shares in Greggs (LSE: GRG) have been volatile. They got a bit overheated in 2021, but they’ve cooled this year. They’re down 24% over 12 months.
The attraction for me is the power of the Greggs brand and the loyalty of its customers. Greggs controls its own supply chain too. And that’s offered some protection from supply issues and price inflation.
It could, however, suffer from the reduced spending power that’s already hitting consumers, as well as by the weak economic outlook for the next couple of years.
It’s not lowly-valued either. We’re looking at a forecast P/E of 19 and a 2.5% dividend yield. That’s not the cheapest on the FTSE 250, by a long way.
But I’d say Greggs has the ability to generate strong cash flow in the decades ahead. I see it as a great company at an attractive price.
Homes
Demand for housing seems likely to fall in 2023, and that’s hammered the housebuilding industry. Shares in Vistry (LSE: VTY) — formerly Bovis Homes — have crashed 46% in the past 12 months.
Forecasts suggest a dividend dip in 2023, but it would still yield 8.5%, largely due to the depressed share price. We’d see P/E multiples of a bit above seven too. That’s way below the sector’s long-term average.
So do I expect Vistry shares to launch into a recovery when the New Year arrives? No, I think the gloom hanging over the sector could persist well into 2023.
But with a long-term view, I can only see Vistry as a cash cow, in a market with solid demand and a chronic supply shortage.
The verdict
I wouldn’t rate any stock as truly a no-brainer, and spending some time on research is essential. But I rate these as among the most attractive in the FTSE 250 index for 2023.
