I’m an advocate of long-term investing, which I’d define as a five to ten-year period. With the current market volatility, some FTSE 250 stocks may experience shorter-term issues but I’m looking for businesses that will emerge stronger once market issues cool.
One stock that I think investors should consider taking a look at is Tyman (LSE: TYMN). Here’s why.
Building materials
Tyman serves the building and construction sector by providing products such as hardware, doors, windows, roofing products, floor access solutions, and more. The business operates internationally in three main segments. These are North America, the UK & Ireland, as well as International, which covers other territories.
With so much volatility caused by macroeconomic issues, including soaring inflation and rising interest rates, it’s no wonder FTSE 250 stocks have struggled. Tyman shares are up 33% over a 12-month period from 200p at this time last year to 265p as I write. However, volatility in recent months has pulled them back 16% from 318p in August to current levels.
The investment case
From a bearish and shorter-term view, the building trade is suffering due to macroeconomic issues. To start, rising costs for all suppliers are putting pressure on profit margins which underpin investor returns and growth initiatives. If Tyman raises its prices, it risks losing customers too.
Furthermore, Tyman may see that an uncertain and weaker economic outlook impacts its performance. After all, consumers are focused on paying essential bills rather than renovations. From a commercial perspective, construction businesses aren’t building as much due to higher costs and weakened demand for products and projects.
Moving to the bull case, Tyman’s wide geographic footprint is a major plus point for me personally. Operations across the UK, North America, and other locations can help boost performance. Furthermore, Tyman makes most of its money from North America, a vast region with plenty of opportunities to boost performance.
Speaking of performance, since its pandemic-affected 2020 results, Tyman has increased revenue and profit for each year. However, I do understand past performance is not a guarantee of the future.
Moving on to returns, Tyman shares’ dividend yield stands at an enticing 5%. This is higher than the FTSE 250 average of 1.9%. Plus, the business has a fantastic record of rewarding shareholders over the years. The only blot on its record in recent years is the pandemic when it cancelled dividends, like many others did. It’s worth remembering dividends are never guaranteed.
Finally, Tyman shares look decent value for money right now on a price-to-earnings ratio of 13.
A FTSE 250 stock I’d buy
To conclude, Tyman is definitely at the mercy of current headwinds so I’ll be keeping a close eye on performance and company developments.
Personally, I’d be willing to buy some Tyman shares for my holdings when I next have some spare cash to invest. During times of economic volatility, governments are looking towards construction and infrastructure projects to help stimulate the economy and Tyman could benefit from this potential increased spending in the years to come.
