3 ways to make a fortune from the FTSE 250

Royston Wild explains how you can generate monster profits from the FTSE 250 (INDEXFTSE: MCX).

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.

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.

Looking to make a mint from the FTSE 250? Well, I am convinced that following these three investment tips could help you generate giant returns from the index.

Buy the housebuilders

In a recent article I championed the terrific housebuilders that currently sit in the FTSE 100. But Britain’s second-tier share index isn’t exactly short of hot construction stocks of its own.

Countryside Properties, for example, announced earlier this week that it continues to see “robust demand for our homes,” and that as a consequence its forward order book was up 16% year-on-year as of the close of June, at £409m.

Helped by the recent acquisition of Westleigh Homes that should help it continue plugging Britain’s colossal housing gap, earnings would appear on course to surge. Despite this bright outlook (for the near term and beyond) Countryside is much too cheap in my opinion, the firm carrying a mere forward P/E ratio of 9.4 times.

The same can be said for Redrow and Bellway, to name just a couple of other brilliant builders — the latter advised at the start of June that its order book was up 7.8% year-on-year as of June, for example. These shares sport low earnings multiples of 6.7 times and 7 times respectively.

Another great way to capitalise on the UK’s housing crunch would be to buy Ibstock, a share that I own myself. The brick manufacturer is in great shape to capitalise on the positive outlook for homebuilding activity, yet it can be picked up an undemanding forward P/E ratio of 13.5 times.

Follow the flying aces

The newsflow over at Wizz Air might have been a little mixed of late, but I remain convinced that the long-term profits outlook at the Hungarian flyer remains compelling.

While profits dipped 14% during the three months to June, to €50m, this was due to a colossal rise in flight cancellations related to air traffic control strikes in Europe. I was more interested in news that both revenues and passenger numbers at Wizz Air continued to grow by double-digit percentages, reflecting the airline’s busy expansion strategy and the rising economic might of its core markets of Central and Eastern Europe.

BBA Aviation is another share I am tipping for great things thanks to its wide base of operations across the US, boosted by the recent acquisition of EPIC Fuels which expanded its fixed-base operator locations to 400, as well as buoyant business jet traffic.

BBA might be a tad more expensive than Wizz Air, the firm sporting a forward P/E ratio of 18.1 times versus the airline’s 14.9 times. But this makes it no less of a brilliant buy.

Snap up these screen stars

I recently lauded the investment case of cinema operator Cineworld, a firm that merits a higher rating than its prospective P/E ratio of 13.6 times suggests.

Another film star from the FTSE 250 that I’m tipping for big things is Entertainment One. The company’s television shows like Peppa Pig are already driving solid revenue growth and it is making big changes to improve its film division, something which the acquisition of Sierra Pictures this month will bolster. And like Cineworld, the business sports a very attractive valuation, a forward earnings multiple of 15 times.

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 owns shares in Ibstock. The Motley Fool UK owns shares of and has recommended BBA Aviation. The Motley Fool UK has recommended Redrow. 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.

More on Investing Articles

Investing Articles

Could the JD Sports Fashion share price double in the next five years?

The JD Sports Fashion share price has nearly halved in the past five years. Our writer thinks a proven business…

Read more »

Bus waiting in front of the London Stock Exchange on a sunny day.
Investing Articles

If interest rate cuts are coming, I think these UK growth stocks could soar!

Falling interest could be great news for UK growth stocks, especially those that have been under the cosh recently. Paul…

Read more »

Investing Articles

Are these the best stocks to buy on the FTSE right now?

With the UK stock market on the way to hitting new highs, this Fool is considering which are the best…

Read more »

Petrochemical engineer working at night with digital tablet inside oil and gas refinery plant
Investing Articles

Can the Centrica dividend keep on growing?

Christopher Ruane considers some positive factors that might see continued growth in the Centrica dividend -- as well as some…

Read more »

Smiling family of four enjoying breakfast at sunrise while camping
Investing Articles

How I’d turn my £12,000 of savings into passive income of £1,275 a month

This Fool is considering a strategy that he believes can help him achieve a stable passive income stream with a…

Read more »

Person holding magnifying glass over important document, reading the small print
Investing Articles

2 top FTSE 250 investment trusts trading at attractive discounts!

This pair of discounted FTSE 250 trusts appear to be on sale right now. Here's why I'd scoop up their…

Read more »

Smiling young man sitting in cafe and checking messages, with his laptop in front of him.
Investing Articles

3 things that could push the Lloyds share price to 60p and beyond

The Lloyds share price has broken through 50p. Next step 60p? And then what? Here are some thoughts on what…

Read more »

Young female business analyst looking at a graph chart while working from home
Investing Articles

£1,000 in Rolls-Royce shares a year ago would be worth this much now

Rolls-Royce shares have posted one of the best stock market gains of the past 12 months. But what might the…

Read more »