2 no-brainer FTSE 250 value shares to consider buying for 2025?

These FTSE 250 stocks offer standout value at current prices. Royston Wild explores whether they could be so good that investors should look more closely.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

The FTSE 250 index of shares has risen a healthy 7.5% in 2024. Like the FTSE 100, it’s risen as investors at home and abroad have piled into British value shares.

Both indices have underperformed in recent years due to economic weakness and political turbulence. So despite continued strength as the year draws to a close, there are still plenty of bargains for investors to snap up today.

With attractive metrics like high dividend yields and/or low price-to-earnings (P/E) ratios, the following two FTSE 250 shares have caught my eye. But are they bona fide bargains or potential investor traps?

Should you invest £1,000 in Lloyds Banking Group right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Lloyds Banking Group made the list?

See the 6 stocks

Energean

Created with Highcharts 11.4.3Energean Plc PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

Based on 2025 earnings and dividends, oil stock Energean (LSE:ENOG) appears to be one of the index’s greatest value stocks.

Its P/E ratio for next year is just 4.2 times. Meanwhile, its dividend yield clocks in at 17%.

This unbelievable paper value reflects Energean’s share price slump this year. Could this represent a dip-buying opportunity?

I’m not so sure. The company produces oil and gas off the coast of Israel, and while operations have been unaffected so far by regional conflict, this remains an ongoing threat.

This is not all. While production’s rising, Energean last month cut its output estimates to 150,000 -155,000 barrels of oil equivalent day (boepd) from 155,000 -165,000 boepd. It put this down to weather and market dynamics in Israel affecting November sales, and expectations of flat month-on-month sales in December.

This could be a bad omen for 2025 production estimates which are due in January.

Finally, I’m also concerned about the near-term oil price outlook for next year. Crude values could fly if interest rate cuts stimulate demand and/or fresh supply constraints emerge. However, market fundamentals don’t look especially encouraging today on recent production and demand newsflow.

Analysts at ING Bank are now predicting market oversupply next year of 500,000 barrels a day as non-OPEC output soars.

I think the risks of Energean shares could outweigh the potential rewards. Even at today’s rock-bottom prices.

Babcock International

Created with Highcharts 11.4.3Babcock International Group Plc PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

Babcock International (LSE:BAB) doesn’t have the largest dividend yield on the FTSE 250. For this financial year (to March 2025) the reading here’s a modest 1.4%.

However, I think the defence giant looks brilliantly cheap and is worth considering based on predicted earnings. Its P/E ratio of 11.5 times is well below the corresponding readings of most other UK defence shares.

BAE Systems, for instance, trades on a forward P/E of 18.2. Chemring shares meanwhile sport a multiple of 17.9.

Moreover, the price-to-earnings growth (PEG) ratio on Babcock shares is also ultra low. At 0.3, it’s below the watermark of 1 that indicates that a stock is undervalued.

Supply chain issues remain a problem across the defence sector. Yet the industry outlook remains positive as arms spending reignites, reflecting a multitude of geopolitical worries in the West.

Babcock — which provides engineering and training services — is effectively capitalising on this favourable landscape. Between April and September, its revenues and underlying operating profit leapt 11% and 10% respectively.

With NATO poised to keep raising defence budgets, I expect strong profits growth during the next few years and possibly beyond.

But what does the head of The Motley Fool’s investing team think?

Should you invest £1,000 in Lloyds Banking Group right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Lloyds Banking Group made the list?

See the 6 stocks

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended BAE Systems. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Pound coins for sale — 51 pence?

This seems ridiculous, but we almost never see shares looking this cheap. Yet this recent ‘Best Buy Now’ has a price/book ratio of 0.51. In plain English, this means that investors effectively get in on a business that holds £1 of assets for every 51p they invest!

Of course, this is the stock market where money is always at risk — these valuations can change and there are no guarantees. But some risks are a LOT more interesting than others, and at The Motley Fool we believe this company is amongst them.

What’s more, it currently boasts a stellar dividend yield of around 8.5%, and right now it’s possible for investors to jump aboard at near-historic lows. Want to get the name for yourself?

See the full investment case

More on Investing Articles

Investing Articles

Prediction: 12 months from now, £5,000 invested in Tesla stock could be worth…

Tesla stock has endured a miserable year so far, falling by 29%. Muhammad Cheema takes a look at how it…

Read more »

Investing Articles

See what £10,000 invested in Tesla shares at their mid-December peak is worth today 

As the world absorbs the full scale of Donald Trump's tariffs, Tesla shares are reeling. Investors who bought the stock…

Read more »

Hand flipping wooden cubes for change wording" Panic " to " Calm".
Dividend Shares

2 ‘safe’ LSE dividend stocks to consider as global markets sell off

As global markets experience high levels of volatility due to economic uncertainty, investors are piling into these ‘safe-haven’ dividend stocks.

Read more »

Investing Articles

US stock market rout: an unmissable opportunity for investors?

His tech-heavy portfolio has been smashed by Trump’s tariffs. However, Dr James Fox believes there could be some opportunities in…

Read more »

Investing Articles

After a 13% ‘Trump tariff’ fall, is the Barclays share price too cheap to miss?

Does the Barclays share price fall mean we should all panic and run screaming from the stock market? Nah, of…

Read more »

Mature Caucasian woman sat at a table with coffee and laptop while making notes on paper
Investing Articles

2 investment trusts to consider for a Stocks and Shares ISA

These two investment trusts have a different focus -- but our writer sees both as worth considering, one more for…

Read more »

Investing Articles

Deutsche Bank reiterates Buy rating on 9.6% yielding FTSE 250 stock that was “most shorted in UK”

Our writer investigates why a major broker remains optimistic about a FTSE 250 stock that was once the most shorted…

Read more »

Investing Articles

2 things to remember when stock markets are turbulent

US trade policy has rattled the stock markets in New York, London and elsewhere. Our writer outlines a couple of…

Read more »