Despite recent volatility, the FTSE 250 index of shares has risen 1.6% in the past three months. This takes total gains in the year to date to 7%.
As you’d expect, not every stock has risen in that time. Even a number of top-quality stocks have slumped in value recently.
I’m looking to capitalise on this by buying them for a song today and selling them for much more later down the line. Here are two of my favourites right now.
SSP Group
At first glance, SSP Group (LSE:SSPG) doesn’t look like a natural bargain. At 166p per share, the firm — which sells food and drink from outlets in transport hubs, like airports and railway stations — trades on a forward price-to-earnings (P/E) ratio of 16.7 times.
However, SSP’s price-to-earnings growth (PEG) multiple suggests that this is actually a pretty cheap stock. At 0.3, this sits well inside value territory of one and below.
The company’s share price has dropped 19% over the past three months. This is thanks to a mix of problems related to its continental operations, including strike action on France and Germany’s railways, and unfavourable currency movements.
However, most recent financials in July showed sales picking up momentum, as some earlier issues unwound and leisure-related travel picked up. With eurozone growth tipped to accelerate over the next year, I think SSP’s share price could rebound if (as I expect) revenues remain on their impressive trajectory.
The FTSE 250 firm faces high levels of competition. But I’m confident that, over the long haul, it should still grow earnings strongly. It stands to benefit from rising traveller numbers and steps to increase its geographical footprint.
Panmure Liberum analysts expect SSP to spend £160m on acquisitions this year alone.
Bank of Georgia Group
Bank of Georgia‘s (LSE:BGEO) shares are down 13% during the past three months. In fact, they’ve declined sharply from April’s record peaks as worries over civil unrest and political turbulence in the Eurasian country have grown.
Such concerns can be typical of emerging markets stocks like these. Yet on balance, I think the threat that these developments pose to the bank’s earnings are more than reflected by its rock-bottom valuation.
For 2024, Bank of Georgia’s shares trade on a forward P/E ratio of 3.4 times. Furthermore, they also deal on a corresponding PEG multiple of 0.1, based on their market value of £40.85.
At these prices, I’m tempted to think that the benefits of buying the banking giant outweigh the risks. Demand for financial services products in Georgia is soaring thanks to rising wealth levels. And given low product penetration levels, there remains plenty of scope for market growth.
Latest financials from industry rival TBC Bank underlined the banking sector’s rapid growth. Operating income and pre-tax profit there leapt 16% and 12%, respectively, in the second quarter.
As an added sweetener, the prospective dividend yield on Bank of Georgia shares stands at a gigantic 7%. I think it could be one of the best cheap shares on the FTSE 250 to consider today.
