The coronavirus pandemic has triggered huge challenges for businesses, and extraordinary responses from governments. It makes sense to me to keep calm and carry on investing through the market volatility. Ultimately, the world will return to normal.
With this in mind, here are three FTSE 250 stocks I believe possess both near-term resilience and long-term growth prospects. I’d be happy to buy all three at their current prices.
Pet products and vet practices group Pets at Home (LSE: PETS) was struggling a few years ago under previous management. It was one of the most heavily shorted stocks on the London market through 2017–18.
However, a new chief executive restructured the company. Trading updates over the past 12 months have revealed good momentum in the business. Meanwhile, short positions in the stock have correspondingly reduced.
Open for business
In a Covid-19 update this week, the company confirmed its stores, website, and veterinary practices will remain open. This is to provide “essential pet products and emergency health care.” Management added it has closed the group’s grooming salons.
It’s not ideal, but PETS is in a better situation than many retailers. Its share price is at a 19% discount to its high of earlier this year. It may not be the biggest discount around, but it’s worth having, in my view. This is because I believe this revitalised market-leading UK business has excellent long-term growth prospects.
Made from girders
AG Barr (LSE: BAG) is the owner of a portfolio of soft drink brands, including its original and flagship product Irn-Bru. The company was established as long ago as 1875. And there are still descendents of the founder keeping an eye on things in the boardroom.
World wars, recessions, and depressions have failed to derail the company. I don’t expect the coronavirus to either. Like all long-established family businesses, Barr is conservatively stewarded with a multi-generational perspective. A robust balance sheet is one of the hallmarks of such firms.
Survive and prosper
In a Covid-19 update this week, the company told us it had net cash in the bank of £10.9m at its financial year end. It’s now also drawn down its full £60m revolving credit facilities as a prudent measure.
I’m confident Barr will survive and prosper. And the share price is at a very nice discount of 50% to its all-time high made last year.
IG Group (LSE: IGG) owns leading online platforms for retail, professional, and institutional clients to trade thousands of financial instruments, such as stocks, commodities, and forex. Established in 1974, it’s been in the vanguard of the industry, with numerous ‘world’s firsts’ to its name.
Here at the Motley Fool we’re advocates of long-term investing in great businesses, rather than short-term trading of financial instruments. However, I believe IG has built a great business, earning revenue by facilitating traders. And when markets are volatile, as they are now, traders tend to go into a frenzy.
Last week, the company reported “a significant increase in active clients.” It also said: “This sustained level of volatility and revenue is unprecedented.”
Of course, a big boost to revenue is always welcome. However, it’s the long-term growth story at IG that really interests me. And a discount of 8% to the share price earlier this month is not to be sniffed at, in my view.
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G A Chester has no position in any of the shares mentioned. The Motley Fool UK has recommended AG Barr. 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.