I’m expecting to have some spare cash I can use to invest this month. And as such, I’m on the lookout for some FTSE 250 stocks that offer great value.
The index is home to some of the most exciting UK shares out there. And I think these two could provide solid returns in the years ahead. Here’s why they’re on my watchlist.
I recently opened a position in UK self-storage unit powerhouse Safestore (LSE: SAFE). However, with the stock down over 15% in the last 12 months, and over 25% year to date, I’m tempted to buy some more shares.
In my opinion, there’s a lot to like about Safestore. Firstly, it looks cheap, with a price-to-earnings ratio just short of 6. This sits comfortably below the FTSE 250 average. And suggests that the shares may be undervalued.
On top of that, I also sense a solid passive income opportunity. As I write, Safestore offers investors a dividend yield of over 4%. More importantly, the last few years have seen its dividend grow at an incredible rate (over 400%!).
I also think the stock could provide healthy returns in the years ahead given the plans for European expansion. The business is the largest of its kind in the UK, with 131 stores. However, as it continues to grow, next up on its agenda is overseas growth. We’ve seen this recently with its latest joint venture in Germany with Carlyle.
Large debt on its books is a threat. While high interest rates impacting the price of property could also have a detrimental impact on the business.
However, at its current price, I think it provides an attractive buying opportunity.
Another stock I’m eyeing is easyJet (LSE: EZJ). The share price has been on a turbulent journey of late. In the last 12 months, its rocketed by over 40%. However, its current price of 422p is nowhere near pre-pandemic levels.
Despite this, the business has posted a strong recovery following the end of Covid-19 lockdowns. And this was most recently witnessed in its latest update to investors. For the three months to June, profit before tax rose by £317m year on year to £203m, while revenue per seat increased by 23% as capacity returned to 90% pre-pandemic level.
The firm is also planning to continue expanding its Holiday business following the success seen in recent times. With the package holiday business forecast to deliver over £100m in profits this year, easyJet is now set to expand its offerings to the likes of France and Germany.
The biggest risk facing the business is inflation. With a cost-of-living crisis, consumers may opt to skip a holiday as they look to cut back on spending. What’s more, increased fuel costs could also impact the firm’s operations.
However, as a budget operator, easyJet may be placed in good stead given its position at the cheaper end of the market. And despite headwinds, the business’ strong recovery shows its strength.
What I’m doing
I think both stocks present a buying opportunity this month. Should I have some spare cash, I’ll be looking to buy some shares in both.