I’ve been searching for the best FTSE 250 stocks to buy for my portfolio. And I think now could be the perfect time to buy these particular low-cost stocks.
Babcock International
Defence spending is on the up. According to the International Institute for Strategic Studies, global arms expenditure soared from $1.7trn in 2017 to $2trn last year.
Rising concerns in the West over Russian and Chinese expansionism mean the arms race is likely to continue. So businesses like Babcock International (LSE:BAB) can expect to keep growing profits.
This particular UK share supplies products and services that allow armed forces to achieve their objectives over land and sea and in the air. This includes training pilots, servicing tanks, and building submarine missile systems.
The FTSE 250 company is a major supplier to Britain’s Ministry of Defence, though it also sells hardware in Australia, New Zealand, Canada, France, and South Africa. Arms budgets can be affected by wider economic conditions and a growing strain on public finances. So Babcock’s wide geographic wingspan helps to reduce this threat.
Reflecting the firm’s bright trading outlook, City analysts expect Babcock’s annual earnings to grow 13% this financial year. This means that its shares change hands on a forward price-to-earnings growth (PEG) ratio of 0.6.
Any reading below one indicates that a stock is undervalued. And it makes Babcock a brilliant value stock in my opinion.
Bank of Georgia Group
Worries over the robustness of the world’s banking system continue to linger. Billionaire investor (and The Motley Fool favourite) Warren Buffett is the latest market expert to sound the alarm. He recently claimed to CNBC that “we’re not over [the] bank failures”.
A sector-wide contagion is something that all shareholders of all banks, including Bank of Georgia Group (LSE:BGEO), need to be mindful of. But the absence of escalation since the bailout of Credit Suisse is a good omen. So is the rapid response by regulators to head off an impending crisis.
This is why I’d still consider buying Bank of Georgia shares today. I believe the rewards of owning the business — which has a strong competitive position in the Georgia’s financial services industry — offset the risks. And especially at current prices.
You see the FTSE 250 company trades on a forward price-to-earnings (P/E) ratio of just four times. Low earnings multiples are a signal that earnings could grow slowly over time. Yet I believe profits increases here could impress as the Eurasian nation’s economy rapidly grows.
Okay, the bank was helped by interest rate rises last year. However, pre-tax profit growth of 59.3% in quarter four was still hugely impressive. And it illustrates the massive investment potential that country’s banks offer.
I also like Bank of Georgia shares because of the size of its dividend yields. For 2023 and 2024, these sit at 7.9% and 9.6%, respectively. When it comes to all-round value I find the bank’s shares hard to ignore.
