Some stocks look very tempting currently to me. Two such FTSE 250 picks are Bellway (LSE: BWY) and Big Yellow Group (LSE: BYG).
The reason I’m interested in both is I feel they could soar if a bull market is around the corner. With inflation coming down, and rumours of an impending interest rate cut, a favourable market could be on the horizon.
Here’s my view on both stocks.
Bellway
To say housebuilders have suffered in recent times would be a bit of an understatement. High interest rates, the battle with inflation, and a cost-of-living crisis have impacted completions, sales, and earnings.
I must admit these are still ongoing risks that could hurt performance and investor returns too. A lack of pricing power could hurt Bellway if inflation were to rise again and increase costs.
However, the bull case looks much more clear cut, to me at least. A big part of this is the fact the housing crisis in the UK means there could be plenty of opportunities for Bellway to capitalise. Demand is outstripping supply. Plus, as the population is rising, demand should only increase further.
Digging into some fundamentals, there’s lots to like. Firstly, the shares would offer me a passive income opportunity through a dividend yield of 4.10%. However, I do understand that dividends are never guaranteed.
Next, the shares look decent value for money at present as they trade on a price-to-earnings ratio of 14.
Overall, interest rates coming down and inflation staying under control, combined with the current housing situation in the UK, means Bellway shares could be an opportunity worth considering.
Big Yellow Group
Self-storage provider Big Yellow Group also looks like an interesting opportunity to me too.
Operating in the storage sector, which has experienced huge growth in recent years, things look to be back on the up, after its own issues during the recent malaise.
Plus, it makes a good dividend stock as it’s set up as a real estate investment trust (REIT). This means it must return 90% of profits to shareholders.
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A Q1 update released last week piqued my interest. The key headline was a 4% increase in revenue compared to the same period last year. This seems to have sprung from increased demand from domestic customers. Are people getting ready for a burgeoning housing market once more? Do they have more money in their pocket to once more take advantage of self-storage facilities? The update could suggest this.
In addition to this, the business continues to expand, and is looking to open nine new sites in the near future.
From a fundamental view, a dividend yield of 3.8% is also very attractive.
However, from a bearish view, I’m concerned that Big Yellow’s presence is only in the UK. Rivals such as Safestore have access to the European market. If volatility continues in the UK, Big Yellow could find earnings and performance hurt.
Overall, with a potentially better market outlook ahead, I think Big Yellow shares are also worth me considering too.
