Jon Smith outlines two FTSE 250 stocks that he believes offer long-term value for investors who are looking to build wealth in the next two decades.
Being a mature adult with no savings isn’t a position that any of us want to be in. Yet it’s a reality for some, even at 40, through no fault of their own. If I was in that position right now and wanted to start to build wealth for retirement, I have a couple of FTSE 250 stocks that would be on my radar to consider buying.
To allow me to have the funds to purchase the stocks, I’d first look to cut back on my spending or boost my income. This would leave me with excess funds at the end of each month that I can use to invest.
Doing the simple things well
First up is Hill & Smith (LSE:HILS). It might not be the superstar tech stock that’s in the news all the time, but I like it for different reasons.
The business designs, manufactures and supplies products for the construction and infrastructure industries. The firm is focused mainly on operations in the UK, USA, India and Australia.
I like the stock as one to hold through to retirement as it operates in a sector that should have perpetual demand. What I mean by this is that there’s a constant need for everything from road safety barriers to steel chains. Therefore, the products that the firm sells will always be needed in the future for basic functions. This should mean that it can continue to be profitable (and have a healthy share price) for a long time.
Further, it appeals to me due to its long-term share price growth. A decade ago the stock was trading around 500p. It’s now at 1,850p. Yet the share price isn’t showing signs of slowing down. Over the past year, the stock is up 36%.
A risk is that the firm needs to manage acquisitions carefully. It has snapped up three businesses within the past year. They need to be integrated carefully to ensure that spending isn’t wasted and overly time-consuming.
Across the pond
Next I like the JP Morgan American Investment Trust (LSE:JAM). The recent outperformance of the US stock market has attracted a lot of attention from this side of the pond.
The trust is a nice way to get exposure to US stocks without me having to be an expert. Further, I feel it’s a bit generic to simply buy the major US tech firms. To generate real outperformance relative to the index, I need to have exposure to other companies.
This is what the trust does. Although it still owns major firms like Nvidia and Apple, some of the top holdings also include Loews Corp and Regeneron Pharmaceuticals.
When I’m thinking about stocks to hold to retirement, the trust is an easy way to have some exposure to the US without me having to work too hard in researching individual names.
Over the past year, the stock is up 33%. A definite risk is that the US market could be starting to become a bubble. If we see a sharp correction lower over the next year, I could be kicking myself for buying when I did.
