The Motley Fool

These 2 FTSE 250 stocks are down 20% and 40%! Are they unmissable bargains?

Image source: Getty Images

Everywhere you look, stocks are crashing to earth, and these two FTSE 250 companies have been falling faster than most.

If you believe in buying shares when they are down and then waiting for the recovery, these two could make highly tempting buys. So is now the time to invest in the Signature Aviation (LSE: SIG) share price, down 20%, and the Playtech (LSE: PTEC) share price, down almost 40%?

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…

And if you click here we’ll show you something that could be key to unlocking 5G’s full potential...

Any company that has anything to do with the airline industry is having a grim time, and Signature Aviation is no exception. Signature, formerly BBA, provides refuelling, cargo handling, and maintenance services to the industry.

Signature stock

Tuesday’s full-year results delivered only temporary respite, even though there were some positive numbers in there. The £2bn group completed its sale of Ontic for $1.37bn, and returned $833.6m of capital to shareholders over the 2019 calendar year. The dividend is up 5% and CEO Mark Johnstone promises further progression.

Total group underlying operating profit hit $441.1m, which fell to $320.8m on a continuing group basis. Free cash flows remain strong, totalling $187.2m.

Signature Aviation looks like a good company caught out in a sector sell-off due to problems beyond its control. The coronavirus is giving it a mighty wallop that could continue, even after the panic recedes. Long-term attitudes toward travel could change, especially if businesses discover they can work just as well remotely. Growing concerns about the effect of air travel on climate change will also likely grow.

The group has drawn praise from my fellow Fool writers for its resilience, shrewd acquisitions, and generous dividends, if not for its share price growth. Signature Aviation offers a forecast yield of 5%, with cover of just 1.1. It is surprisingly pricey at 18.5 times forward earnings, given recent events. There is too much uncertainty around for me to buy at that price.

Dangerous game

Playtech (LSE: PTEC) was in trouble well before the current sell-off. When I wrote about it last summer, its stock had fallen 60% in just two years, as profits disappointed. Now, the gambling software provider has got caught up in the coronavirus sell-off.

Last week’s final results warned that large-scale global events such as pandemics, political unrest, and climate change can hurt its key markets, particularly if they affect live sporting events. Unfortunately, two of Playtech’s key markets, China and Italy, are in the eye of the coronavirus storm.

The gambling sector also faces regulatory risk, as it comes under pressure to make products “safer, fairer, and crime free”, as Playtech puts it, while licensing requirements in regulated markets are regularly reviewed.

After starting the year strongly, the COVID-19 impact means results for 2020 are likely to be below existing market expectations”.

In contrast to Signature Aviation, the shares look dirt cheap trading at just 5.9 times forward earnings. The generous 6.9% yield is covered 2.4 times, while shareholder returns rose 4% last year, boosted by a €40m share repurchase programme. This is a risky income play, but if China and Italy get a grip on the coronavirus, now could prove a good time to buy it. Feeling brave?

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US $12.3 TRILLION out of thin air…

And if you click here, we’ll show you something that could be key to unlocking 5G’s full potential...

It’s just ONE innovation from a little-known US company that has quietly spent years preparing for this exact moment…

But you need to get in before the crowd catches onto this ‘sleeping giant’.

Click here to learn more.

Harvey Jones has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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.

Our 6 'Best Buys Now' Shares

The renowned analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply enter your email address below to discover how you can take advantage of this.

I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement.