Stock markets may not be out of the woods, but they’re sure in a better place than they’ve been in the recent past. The FTSE 250 was up around 20% at its last close, from the sub-13k bottom it touched in March. This might or might not be the end of the stock market crash. We don’t know. And we won’t know until there’s more clarity on how well Covid-19 has been controlled. But incoming reports do suggests that we may well be on our way to controlling it over time.
Even if we have some distance to cover (not to mention an economic slump), I think this can be positive for investors. As a long-term investor, I’m looking to buy stocks that I believe will perform over time. This, in turn, is likely to reflect in their share prices as well. After deciding where to invest, all I need to do is sit tight and let the storm blow over.
One of the companies I like now is FTSE 250 public transport provider National Express Group (LSE: NEX). Its share price had risen by over 176% at the time of writing from the lowest point touched in the stock market crash. This is a huge increase by any standards.
Strong financials despite coronavirus
For those of us who’d like to buy the share, but completely missed buying it at the lowest, all is not lost. Far from it. Consider this: in 2020 so far, the National Express share price has been lower by 15% on average compared to 2019. And right now, its share price is even lower than the average. In other words, there’s potential for it to rise from here. The company’s latest trading update also inspires some confidence.
Like all travel businesses, NEX has been impacted by the lockdown. Even so, revenue was up by around 9% for the first quarter of the year. It also reported positive earnings and cash flow. Like FTSE 100 low-cost airline operator easyJet, NEX has availed itself of government support to maintain liquidity. This isn’t a desirable situation for any company, but at a time when its business has come to a halt, it is reassuring to know that it has enough cash on hand.
Strong growth potential for this FTSE 250 stock
That it has a track record of healthy performance is a plus for me as well. If I’d invested in it during the last stock market crash, my investment would have more than doubled by the end of 2019. Moreover, its price-to-earnings ratio (P/E) of 9.1 times also makes it attractive. While it has withdrawn its final dividend like many other companies as it seeks to conserve cash during the crisis, there’s plenty of growth potential, which makes it a stock to consider buying.
